March 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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Collective Investment Trusts and Good Governance Considerations

This 14-page paper explores relevant portions under each of the three legs of the regulatory triad. In particular, it examines the regulatory emphasis on the central role that good CIT governance -- in the form of well-designed and implemented bank-maintained processes and procedures -- plays in the ongoing management and operation of CITs. It also addresses and discusses how regulatory considerations inform CIT governance policies and may be reflected and implemented through good governance practices.

Source: Wilmingtontrust.com, March 2022

Retirement Plan Governance Considerations for Collective Investment Trusts

The differences between CITs and mutual funds create different fiduciary implications for plans using them. Plan sponsors considering collective investment trusts for their 401k plans should focus on the product provider's CIT governance policies and procedures, according to industry experts.

Source: Plansponsor.com, March 2022

Employers Use SDBAs to Give Employees Choice

Self-directed brokerage accounts allow plan sponsors to keep their menu streamlined, while also alleviating specific investment demands from some participants. They can also help keep participants in the plan and be an avenue for offering not-so-standard investment options, but they're not right for every plan.

Source: Plansponsor.com, March 2022

Judge Refuses to Dismiss Lawsuit Against DST Systems and Investment Manager

The lawsuit alleges 401k plan fiduciaries and a former investment manager breached their fiduciary duties by allowing a large portion of plan assets to be invested in Valeant Pharmaceuticals stock.

Source: Planadviser.com, March 2022

Ruling Permits Key Parts of Pentegra ERISA Suit to Proceed

A new order has been issued in an ERISA lawsuit filed against Pentegra Retirement Services in the U.S. District Court for the Southern District of New York, granting in part the defendant's motion to dismiss but siding mostly with the plaintiffs. The core allegations in the complaint can now proceed to discovery and potentially to trial.

Source: Planadviser.com, March 2022

Plan Recordkeeping to Get More Expensive

If your retirement plan recordkeeper wasn't acquired within the past few years, don't be surprised if it happens in 2022. The frenzied M&A activity across corporate America has been particularly evident in the retirement plan recordkeeping industry, and industry observers predict continued consolidation in the years ahead. The reasons industry stalwarts have exited the recordkeeping business are many, but a primary contributor has been the intense fee compression seen by the industry over the past decade. The organizations that remain are desperately seeking alternative revenue sources, leaving plan sponsors with several new concerns.

Source: Francisinvco.com, March 2022

Whitepaper: Debunking Recordkeeping Fee Theories in Excessive Fee Cases

According to Euclid's whitepaper, "most large defined contribution retirement plans in this country have low recordkeeping fees -- fees that are often five to ten times lower than the recordkeeping fees in most under $100 million small-asset plans." This new whitepaper reviews the common tactics used by plaintiff law firms to allege excessive plan administration fees.

Source: Euclidspecialty.com, March 2022

Secure 2.0 - Don't Count Your Chickens Before They Hatch

The House of Representatives passed SECURE 2.0. The bill passed by a nearly unanimous margin of 414 to 5. It doesn't get much more bipartisan than that. Now, the Senate must pass it before it can go to the President for signature. Even though that may sound like a fast track, it might be a little early to count those chickens.

Source: Dwc401k.com, March 2022

Legislation Establishing Starter 401k Plans Introduced

A bipartisan bill introduced in the U.S. Senate March 30 would make it easier for small businesses to offer retirement plans for their employees. The Starter-K Act of 2022 (S. 3955) was introduced by Sens. John Barrasso and Tom Carper, both of whom sit on the tax-writing Senate Finance Committee. The bill would create starter retirement plans that streamline regulations and lower costs for small businesses and start-ups, resulting in more access to easy retirement savings.

Source: Asppa.org, March 2022

House Passes Retirement Reform Proposal

The House of Representatives has passed the Securing a Strong Retirement Act of 2022 (SECURE 2.0) by a 414-5 vote. H.R. 2954 was first introduced by House Ways and Means Committee Chairman Richard Neal and Ranking Member Kevin Brady in October 2020, and subsequently amended by the Ways and Means Committee last year. The bill now includes provisions from the Retirement Improvement and Savings Enhancement Act that came out of the House Education and Labor Committee last November. Several key provisions are highlighted here.

Source: Ascensus.com, March 2022

Work Product in the ERISA Context

Documents that are used in the administration of a retirement plan and would have been prepared regardless of pending litigation are not protected by the work product doctrine. Similarly, "as a general rule, investigatory reports and materials are not protected by the attorney-client privilege or the work product doctrine merely because they are provided to, or prepared by, counsel." Thus, the proponent of the work product privilege must show, at the very least, "some articulable claim likely to lead to litigation has arisen." The threshold inquiry when analyzing the work product doctrine is whether the documents were prepared in anticipation of litigation.

Source: Wagnerlawgroup.com, March 2022

2021 Was Another Banner Year for Retirement Savers

Employer-sponsored retirement plans and individual retirement accounts reached almost $40 trillion in total assets by the end of last year, even as a recovering economy faced some key pain points, according to new data released by the Investment Company Institute.

Source: Planadviser.com, March 2022

District Court Dismisses ERISA Lawsuit Against Principal

A new order has been issued in a complex ERISA lawsuit involving Principal, granting the defense's motion to dismiss and likely bringing a convoluted litigation process to a close. The litigation was originally focused on fiduciary breach allegations leveled against a hospital network -- claims which have since been settled -- but it also included separate accusations against Principal.

Source: Planadviser.com, March 2022

Five Reasons DOL (Almost) Prohibits 401k Cryptocurrency Investments

The DOL has expressed serious concerns about a 401k plan fiduciary's decision to expose participants to investments in cryptocurrency and related investments. The DOL identifies numerous issues with the kinds of risks that accompany investments in cryptocurrencies and takes the extraordinary measure of threatening to investigate plans and plan fiduciaries that allow participants to invest in cryptocurrency and related products. The agency outlines five reasons in support of its cautionary stance.

Source: Frostbrowntodd.com, March 2022

The Special MEP Unified Plan Rule: Kicking Out the Rotten Apple After Secure

On March 25, 2022, the Department of the Treasury released new proposed regulations concerning the special application of the Unified Plan Rule to certain multiple employer plans. Treasury attempted to address this issue before the enactment of the Setting Every Community Up for Retirement Enhancement Act of 2019. However, the issue became even more relevant (and perhaps more complex) due to changes to the statute under SECURE.

Source: Ferenczylaw.com, March 2022

Flexibility in DC Investing Now Essential: JP Morgan

Given that strategies that worked for DC plans in the past may be less successful in the future, it will be critical to incorporate forward-looking market views to keep participants on track, the firm suggests in a new paper. In the paper, JP Morgan's Jared Gross and Emily Cao explain that factors, such as asset allocation, manager selection, performance, and fees, were less meaningful in a period of sustained strong investment returns.

Source: Asppa.org, March 2022

What Trends Are Impacting DC Plan Investment Menus?

NEPC is out with its 2021 Defined Contribution Plan Trends and Fee Survey, examining current plan investment trends and innovations across major sectors. While target-date funds continue to be the "turnkey solution," NEPC notes that one of the more prominent developments is that menus are moving toward index funds. In 2021, 44% of respondents had plan assets invested in TDFs, compared with 28% in 2011. In addition, 97% of plans offer TDFs and 95% of 2021 respondents are using TDFs as the plan default.

Source: Asppa.org, March 2022

Investment and Recordkeeping Fees Questioned in ERISA Lawsuit Against DaVita

Retirement plan participants have filed a class-action complaint against health care provider DaVita Inc., its board of directors, and the retirement plan administrative committee alleging ERISA breaches of fiduciary duty. Plaintiffs claim the plan charged excessive fees for investments and recordkeeping services for a plan of DaVita's size.

Source: Planadviser.com, March 2022*

IRS Issues Proposed MEP Rule

The IRS has released a new proposed rule providing for an exception, if certain requirements are met, to the application of the "unified plan rule" for multiple employer plans when there is a failure by one or more participating employers to take actions necessary to satisfy requirements of the Internal Revenue Code. The unified plan rule specifies that the failure by one participating employer to satisfy an applicable qualification requirement would result in the disqualification of the MEP for all employers maintaining the plan.

Source: Ascensus.com, March 2022

Is Restricting 403b Vendors Legal in California?

The author says, "A strange thing is occurring in K-12 403b plans in California. Many employers are not allowing new vendors on their 'approved vendor list' or have erected significant barriers to entry. The irony is that these barriers were not in place for the worst vendors this state has ever witnessed and those bad vendors continue to be allowed to hawk their wares with little restriction. New vendors that have something real and different to offer are being denied access. What is going on with vendor lists and what is actually legal according to California law?"

Source: 403b.substack.com, March 2022

SECURE 2.0 Vote Will Take

A late-Friday afternoon news dump in the form of a memo from House Majority Leader Steny Hoyer said the House would vote on popular and largely bipartisan retirement security legislation.

Source: 401kspecialistmag.com, March 2022

Record Growth of CITs Spurs Rebound of Contributions to Target-Date Strategies

On the heels of releasing its inaugural Retirement Plan Landscape Report earlier this month, Morningstar today published its annual Target-Date Strategy Landscape Report, which found that total assets in target-date strategies grew to a record $3.27 trillion at the end of 2021, nearly a 20% increase over the previous year. The 2022 report also examines the growing trend of collective investment trusts as plan sponsors' preferred target-date vehicle, how fees continue to be a key driver in target-date selection, and primary differences between "to" versus "through" glide paths.

Source: 401kspecialistmag.com, March 2022

Letter to the GAO on Stronger Spousal Protections in DC Plans

Letter from Senator Patty Murray and Senator Richard Burr to the U.S. Government Accountability Office asking them to examine the need for stronger spousal protections in defined contribution retirement plans. They state that people plan their futures around their retirement accounts, so no one should have these critical resources undermined by a spouse's decisions without their knowledge or consent.

Source: Senate.gov, March 2022

Connecticut Launches There Private-Sector Retirement Savings Program

Connecticut Comptroller Natalie Braswell announced on March 24 the launch of MyCTSavings, the state-run retirement savings program intended to provide coverage for private-sector employees whose employers do not offer them a plan. A pilot was started in September 2021.

Source: Prnewswire.com, March 2022

Survey Reveals Retirement Confidence Gap Across Generations

American workers of all generations put comfortable retirement among their top life goals, yet a large percentage are uncertain about how to plan for it, when to retire, and how they will pay for it, according to the latest Retirement Security Survey released by the Principal Financial Group.

Source: Principal.com, March 2022

Retirement Plan Asset Flows Can Influence Plan Decisions

Retirement plan sponsors are navigating several coalesced challenges that are related and might impact their plans: spiking inflation, market volatility, the potential for large portions of assets leaving the plan due to the so-called "Great Resignation," as well as the growing number of Baby Boomers entering retirement.

Source: Planadviser.com, March 2022

Using Retirement Account Features for Short-Term Savings

Workers can often use retirement savings for unexpected expenses. However, policymakers have expressed an interest in helping workers save for emergencies in ways that do not draw down their retirement assets. Some proposals to increase short-term savings envision new add-on accounts. Other proposals would use existing features of employer-sponsored DC plans that allow funds to be used for unexpected expenses. This 3-page report discusses two of such existing features: deemed Roth Individual Retirement Accounts and after-tax accounts within qualified retirement plans.

Source: Congress.gov, March 2022

Enhancing Emergency and Retirement Savings Act Introduced in House

Representative Brad Wenstrup has introduced the Enhancing Emergency and Retirement Savings Act of 2022 to provide flexibility and access for those who experience unexpected emergencies. The bill is the House companion to S. 1870, introduced by Senator James Lankford and Senator Michael Bennet last year. The legislation would provide a penalty-free "emergency personal expense distribution" option from employer-sponsored retirement plans and IRAs.

Source: Ascensus.com, March 2022

Chart: IRS DC Document Restatement Cycles

This chart reflects actual or expected timeline dates (January 2022 for the DC plans). The IRS may modify certain Cycle 3 timeline dates in the future.

Source: Asc-net.com, March 2022

Plan Sponsors Adding 401k Enhancements

Employers are eyeing changes to their DC plans to improve their employees' retirement security and financial wellbeing and to help with recruitment and retention. In a survey of 363 DC plan sponsors representing a broad range of industries, Willis Towers Watson found that 75% of respondents made a change to their plan in the last two years and expect to make at least one change over the next two years. An additional 14% of sponsors that did not make a change over the last two years plan on making at least one change over the next two years.

Source: Napa-net.org, March 2022

Another Suit Targets "Untested" TDFs

The $741 million, 15,686 participant plan is accused primarily of causing the plan to invest in flexPATH's "untested target-date funds, which replaced established and well-performing target-date funds used by participants to meet their retirement needs." The plan fiduciaries are also alleged to have "failed to use the Plan's bargaining power to obtain reasonable investment management fees, which caused unreasonable expenses to be charged to the Plan."

Source: Napa-net.org, March 2022

Make Pensions More Like 401ks

Policymakers are studying how to engineer 401ks and other DC plans to function more like pensions. The goal is to assist retirees in managing their mortality, investment, and inflation risks. A traditional pension automatically manages these risks without any worker involvement. And, benefit dollar-for-dollar, pensions are more economical than DCs because pensions enable individuals to share these challenges and offload most decisions to professional managers. In this 3-page editorial, the author suggests the solution may be to build a better pension plan rather than make DC's more pension-like.

Source: Klgates.com, March 2022

401k Plan Sponsors Should Focus on What the Government Is Focused On

As a 401k plan sponsor, you're concerned with a lot of things as a plan fiduciary. The Internal Revenue Service and Department of Labor also have quite a few topics they are focused on. Like with the old E.F.Hutton commercials, treat the IRS and DOL like an E.F. Hutton broker, listen when they talk.

Source: Jdsupra.com, March 2022

Cryptocurrency: Navigating a Frontier Asset Class for Advisors and Asset Managers

With cryptocurrency reaching $3 trillion in market capitalization in 2021 before falling back to $2 trillion amidst market volatility in early 2022, it is increasingly important for investing market participants, including asset managers and advisors, to engage and take a view. This paper explores reasons why advisors are or are not adopting cryptocurrency as part of their offering, and dives into product development trends that are delivering standards, investment vehicles, and strategies for exposure to the asset class.

Source: Cerulli.com, March 2022

Virtual 401k Education Is on the Rise, Reaching More Workers More Efficiently Than Ever

Workers attended more virtual education sessions last year than ever before to learn about their 401k plans and other financial topics, according to new data from Schwab Retirement Plan Services. Participant viewership for virtual live and on-demand sessions was up 33% year-over-year in 2021 as the number of onsite in-person meetings dropped to near zero because of the pandemic.

Source: Businesswire.com, March 2022

The Impact of 401k Cash-Outs on Retirement Income

Due to the power of compound interest, seemingly small amounts that leak from 401k accounts when people change jobs can cause major erosion to retirement nest eggs down the line. This paper seeks to examine what people do with their 401k balances when they leave an employer and look at the demographics of people who roll in balances to their new employers.

Source: Alight.com, March 2022

DOL Warns 401k Plans Against Allowing Crypto Investments

The DOL is warning 401k plan fiduciaries to "exercise extreme care" before considering whether to include a cryptocurrency option in a plan investment menu. The sternly worded guidance, in Compliance Assistance Release No. 2022-01, published March 10, reveals heightened skepticism of 401k cryptocurrency investments and predicts new DOL enforcement activity for fiduciaries who permit participants to invest in cryptocurrencies.

Source: Shrm.org, March 2022

The Biggest Retirement Plan Leakage Triggers and Costs for Participants

The biggest triggers for retirement plan leakage are participants taking pre-retirement distributions, loan defaults, and hardship withdrawals, according to an industry expert. Asset leakage is an important issue for plan sponsors because larger retirement plans are better positioned to negotiate with recordkeepers and investment providers to secure institutionally priced investment products and lower fees by trading on their size and bargaining power.

Source: Planadviser.com, March 2022*

ESG and Participant Communications

Many plan sponsors are at various stages of considering how to incorporate ESG into their retirement plan design and fund offerings. Plan sponsors that have incorporated ESG in their retirement plans are looking for best practices when communicating with participants about ESG. This piece is intended to provide such plan sponsors and their service providers with a framework for engaging participants on the topic of ESG and how it may be integrated into their retirement plan communications.

Source: Dciia.org, March 2022

Three Barriers to ESG Adoption for U.S. DC Plans

DCIIA's Retirement Research Center interviewed 12 defined contribution practice leaders at leading U.S. consulting firms on barriers to incorporating environmental, social and governance considerations and investments in U.S. DC plans. According to these consultants, while interest in and demand for ESG continues to grow, implementation remains challenging. This report describes the three barriers to implementation identified by U.S. consultants.

Source: Dciia.org, March 2022

The Impact of Lower Cost Products and Services in 401k Plans

There has been a recent upsurge in interest around extending the capabilities of defined contribution plans to better prepare plan participants for a secure and healthy retirement. Traditionally, such plans were viewed as accumulation vehicles, with funds often rolling over to retail investment vehicles at retirement or employment separation. This model is now being reconsidered as it becomes clear that America's retirement readiness could be substantially enhanced.

Source: 401kspecialistmag.com, March 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, March 2022

Safe Harbor Plan Rules for 2022

It's helpful to know which IRS rules and limits apply from year to year, whether you currently offer a Safe Harbor 401k or you are exploring options to open a small business 401k plan in 2022. See what rule changes are in place for small business Safe Harbor 401k plans for 2022.

Source: Myubiquity.com, March 2022

401k Deadlines for Plan Sponsor's in 2022

Every month holds important deadlines for employers offering small business 401ks. The following checklist will help you prepare for the road ahead and stay on top of deadlines.

Source: Myubiquity.com, March 2022

Should Private Equity Be in 401k Plans?

In 2021, the Department of Labor issued an information letter that some interpreted as green lighting private equity investments through 401k plans. The DOL has issued new guidance for fiduciaries clarifying that it hasn't endorsed these investments and discussing the risks and issues. This article analyzes the DOL's clarification of its position.

Source: Investmentnews.com (registration may be required), March 2022

Defensive Plan Provisions Designed to Prevent ERISA Lawsuits

Plan sponsors may consider adding three different types of defensive provisions to their retirement plans to help cut down on the number of participants filing claims alleging violations of ERISA. These defensive provisions can include claims procedure requirements, plan limitation periods, mandatory arbitration clauses, and class action waiver and venue provisions. All these provisions can help plan sponsors control any litigation that ultimately occurs.

Source: Hallbenefitslaw.com, March 2022

IRS Proposes New Rules for Required Minimum Distributions

On February 24, 2022, the IRS issued proposed regulations for determining the required minimum distribution payable to retirement plan participants and their beneficiaries. This article addresses the proposed regulations in the context of the SECURE Act provisions specific to employer-sponsored defined contribution plans. It concludes with action items for employers pending the issuance of final regulations.

Source: Caplindrysdale.com, March 2022

DOL Releases Cautionary Guidance on Crypto in Retirement Plans

Cryptocurrencies have been promoted and have garnered significant attention in recent years as innovative investments that offer unique potential for outsized profits, but it's the opinion of the Department of Labor and many investment professionals that the potential pitfalls associated with these investments are not widely understood or appreciated by investors.

Source: Schneiderdowns.com, March 2022

Cryptocurrency and 401k Plans: DOL Implores Fiduciaries to Exercise Extreme Care

According to CAR 2022-01, the DOL's concerns about the prudence of a fiduciary's decision to expose a 401k plan's participants to direct investments in cryptocurrencies or other products whose value is tied to cryptocurrencies stem from the significant risks of fraud, theft, and loss that have been endemic to these asset classes at least as of this early stage in their evolution. CAR 2022-01 elaborates on several aspects of cryptocurrencies that are at the heart of the DOL's apprehensions.

Source: Ropesgray.com, March 2022

Costco Agrees to $5.1M ERISA Case Settlement

The parties in an ERISA lawsuit filed against Costco have reached a settlement that will see the company pay $5.1 million to resolve allegations that it committed fiduciary breaches in the provision of retirement benefits to employees. The lawsuit arose in June 2020, when a participant in the Costco 401k Retirement Plan filed a suit against his employer, its board of directors, and the members of a benefits committee.

Source: Planadviser.com, March 2022

403b Plan Design Continues to Evolve

403b plans have undergone many changes since IRS regulations were finalized in 2007. A report from BrightScope and the Investment Company Institute notes that it is difficult to get a full picture of the 403b plan market as some plans are not governed by ERISA. However, the report offers a profile of the 403b plan market and how it has evolved over the years.

Source: Plansponsor.com, March 2022

Plan Design Features to Drive Higher Savings Rates

Plan sponsors must find the right balance between adopting plan features that will help their employees prepare for a financially secure retirement and staying on budget with plan expenses. Different combinations of plan features are going to be right for different types of employers, depending on their employee demographics. A few recent studies may help plan sponsors and their advisors evaluate how combining various plan features could drive the strongest participant savings outcomes.

Source: Newportgroup.com, March 2022

Participant Sues for Right to Defer More

A new 401k suit has been filed with a participant-plaintiff charging an employer with failing to let him save as much as he wants to. That's right, one Lance Baird has accused his employer Hyatt Corporation of failing to properly honor his repeated requests to increase the amount of his salary that would go to his 401k account.

Source: Napa-net.org, March 2022

Plan Document Foul-ups Can Cost You as a 401k Plan Sponsor

As a plan sponsor, there are many things you don't know about your plan document and you really should because the plan documents could be a major culprit in what ails your 401k plan.

Source: Jdsupra.com, March 2022

DOL Expresses Skepticism Regarding 401k Investment in Cryptocurrency

While the DOL's Compliance Assistance Release 2022-01 does not establish any new legal principles, it would appear to set a skeptical tone regarding the appropriateness of cryptocurrency investment options under 401k (and similar participant-directed) plans.

Source: Dechert.com, March 2022

Bitcoin in Your 401k? DOL Cautions Fiduciaries About Cryptocurrency Risks

Participants are pressing plan sponsors to make cryptocurrency investments available in their 401k plans. While Bitcoin may immediately come to mind when cryptocurrency is mentioned, there are at least 100 types of cryptocurrency now available to investors. Less or nothing is said about the legal liability and potential risks. Both President Biden and the Department of Labor have now taken steps that should alert fiduciaries about their legal exposure if they make these investments available through their plans.

Source: Cohenbuckmann.com, March 2022

New Audit Rules for Employee Benefits Plans Take Effect

After the U.S. Department of Labor expressed concerns about the quality of audits in employee benefit plans, the American Institute of Certified Public Accountants released a Statement on Auditing Standards (SAS 136) to address those concerns. Originally slated to go into effect in 2020, AICPA delayed implementing the audit rules for one year due to the COVID-19 pandemic. As a result, SAS 136 will apply to 2021 employee benefit plan audits.

Source: Hallbenefitslaw.com, March 2022*

DOL Threatens to Investigate Fiduciaries Over Cryptocurrency in 401ks

Compliance Assistance Release No. 2022-01 is a significant departure from DOL's established regulatory norms. The author states that they are not aware of any other instance in which DOL has made such sweeping statements about the potential prudence of an entire asset class. DOL has recently elected to back away from proposals to create special standards for specific asset classes. However, in the Release, DOL implies that the agency will presume that fiduciaries making cryptocurrencies available have acted imprudently.

Source: Groom.com, March 2022

Learn How to Protect Your 401k Clients From Cyberattacks

Cyber insecurity is a serious problem. Only 76% of RIAs hold cyber insurance, leaving 24% unprotected in case of a breach in addition to being exposed to these threats. Of those with cyber insurance, the median coverage amount is only $1 million. These assets and the personal information that come along with them are even more vulnerable due to the numerous parties collaborating on them, from recordkeepers to payroll companies to TPAs to plan sponsors and everyone else in between. To combat these online threats, start by asking questions.

Source: Fiduciarydecisions.com, March 2022

DOL Makes No Secret Of Its Concerns About Crypto

In a recent compliance assistance release, the DOL said that "at this early stage in the history of cryptocurrencies, [the DOL] has serious concerns about the prudence of a fiduciary's decision to expose a 401k plan's participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies." Cryptocurrency presents "significant risks and challenges to participants' retirement accounts, including significant risks of fraud, theft, and loss," the DOL wrote.

Source: Eversheds-Sutherland.com, March 2022

Do Employers Need a CISO for ERISA Compliance?

As DOL investigators grapple with applying the Guidance along with their internal resources, it remains unclear whether they will be fixated on requiring in all cases an express designation of a Chief Information Security Officer by all retirement plan sponsors and plan service providers. Of course, it will be important for organizations to clearly define and assign information security roles and responsibilities. The lack of a CISO designation alone should not necessarily mean an organization's data security efforts are rudderless.

Source: Benefitslawadvisor.com, March 2022

Retirement Policy: Aligning Plan Design With Effective Employee Engagement

This 10-page paper addresses how retirement program design can impact decisions that participants make to improve retirement security. Most defined contribution retirement plans, such as 401k plans, leave important and sometimes complex choices to the individual. Underlying the DC retirement plan structure is the assumption that individuals are equipped to make decisions in their own best interests, and that they will do so. However, this assumption might not always be accurate, especially if individuals lack the resources and/or knowledge needed to make informed choices.

Source: Actuary.org, March 2022

Why Account Consolidation is Vital to Reduce 401k Cybersecurity Risk

With $10 trillion in 401k and other defined contribution retirement assets to safeguard, retirement industry regulators are intensely focused on the issue of cybersecurity. Account consolidation can lower retirement savings cybersecurity risks by minimizing the sheer number of fraud-prone, small-balance retirement savings accounts.

Source: 401kspecialistmag.com, March 2022

Study Shows the Value of DC Plans for Employees

An ICI survey also found defined contribution plan participants want to maintain control of their investments. Fortunately, most plans offer guardrails for those that would harm themselves by doing so.

Source: Plansponsor.com, March 2022

Advisers Can Help Women Add to Growing Retirement Confidence

Women are showing more confidence about their retirement readiness and in managing their finances, amidst the ongoing pandemic, according to research from two financial institutions. The Nationwide survey shows that women with investable assets of $100,000 or more who are primary or shared decision-makers regarding financial planning are pivoting to approach finances more proactively and want help with strategies to reach financial goals.

Source: Planadviser.com, March 2022

Retirement Savers Show Confidence in Current 401k Model

A recent ICI survey found that a majority of Americans dislike the idea of government-controlled investment options and are confident in their ability to make their own asset management decisions.

Source: Planadviser.com, March 2022

DOL Compliance Notice Warns Against Crypto Risks

The DOL's Compliance Assistance Release No. 2022-01 urges plan fiduciaries to exercise "extreme care" before they consider adding a cryptocurrency option to a 401k plan's investment menu.

Source: Planadviser.com, March 2022

Supreme Court Decision Impacts 401k Plan Litigation

Are plan fiduciaries protected from excessive fee lawsuits just because they offer participants a menu of investment funds that includes some low-fee investment choices? Or are plan sponsors and other fiduciaries required to do more than that? The answer to these questions may determine whether an excessive fee lawsuit is dismissed quickly and before an expensive, time-consuming trial.

Source: Penchecks.com, March 2022

Retirement Plan Fiduciaries Must Wisely Consider All Investment Options

Retirement plan fiduciaries have a duty to monitor investment options continuously and remove all imprudent ones, a unanimous U.S. Supreme Court recently ruled in a much-anticipated decision. In this opinion, the Court made it clear that fiduciaries can't ignore imprudent investment options in 401ks or other retirement plans even if other, prudent choices are available.

Source: HRdailyadvisor.blr.com, March 2022

DOL Issues Big Caution on Crypto

The DOL has published compliance assistance for 401k plan fiduciaries considering plan investments in cryptocurrencies, in an effort aimed at protecting the retirement savings of U.S. workers. Compliance Assistance Release No. 2022-01 cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401k plan's investment menu for plan participants.

Source: Asppa.org, March 2022

Alternative Investments in Participant Directed Individual Account Plans: The Treatment of Private Equity Sleeves

While the plan asset issue continues to be a significant one concerning investments in private equity funds, recently the focus has been upon offering private equity funds as a part of an asset allocation fund, an issue that had been addressed both by the Department of Labor and a California federal district court on multiple occasions, as discussed here.

Source: Wagnerlawgroup.com, March 2022

How to Shoot Yourself in the Foot With Your SPD

Benefit plan sponsors sometimes send out Summary Plan Descriptions having given too little thought to the legal consequences. Two recent cases illustrate how an organization can end up in serious and costly litigation based on statements that did not have to be made in SPDs that did not have to be issued.

Source: Verrill-law.com, March 2022

IRS Provides Additional Clarity on RMD Calculations

On February 24, 2022, the IRS published proposed regulations addressing the calculation and payment of required minimum distributions under qualified retirement plans. The proposed regulations are generally designed to address the changes to a participant's required beginning date and payment of death benefits enacted under the SECURE Act. For defined contribution plan sponsors, the proposed regulations also provide needed clarifications on the calculation of death benefits.

Source: Reinhartlaw.com, March 2022

Reviewing Fees, IPS Top Focus of Large DC Plan Sponsors

Large plan sponsors continue to be laser-focused on fees, but they also will be taking a close look at their investment policy statements and conducting formal fiduciary training in the coming year. These are among the findings in Callan's 2022 Defined Contribution Trends Survey. Now in its 15th year, the survey reviews key findings from 2021 and expectations for 2022 for DC plan sponsors.

Source: Napa-net.org, March 2022

Class Action Suit Challenges Big CUSIP Licensing Fees

A class-action complaint was filed last week in the Southern District of New York that could have a ripple effect on the retirement industry's infrastructure, and, at least potentially, the costs of operation.

Source: Napa-net.org, March 2022

The Mistakes Employers Should Avoid When Starting a 401k Plan

Being a retirement plan sponsor is a big deal when you factor in the responsibility of being a plan fiduciary, so it's important that the employer gets on the right foot and avoids making these mistakes when starting a 401k plan.

Source: Jdsupra.com, March 2022

Defined Contribution Plan Profile: A Close Look at ERISA 403b Plans, 2018

This 68-page report focuses on ERISA 403b plans in 2018. It first analyzes 403b plans in the Department of Labor 2018 Form 5500 Research File. Focus then shifts to more than 6,200 audited 403b plans in the BrightScope Defined Contribution Plan Database, which typically have 100 participants or more.

Source: Ici.org, March 2022

Easing the Potential Burden of Abandoned 401k Accounts

The current environment not only makes it hard to build and manage an effective workforce but plan sponsors also may face problems down the road when departing workers leave their 401k balances with their previous employers. These abandoned accounts can lead to penalties, additional administrative fees, and administrative challenges for employers. How can plan sponsors resolve these issues?

Source: Berrydunn.com, March 2022

Approaches to the Employer Match

The employer match is effective in recruiting and retaining employees, as well as encouraging them to participate in a retirement plan. A recent article looks at different approaches an employer can take in matching participant deferrals. Three approaches to providing the match are explained.

Source: Asppa.org, March 2022

DOL to Hold Fiduciary Responsibilities Webcast Series in March

To help increase awareness and understanding about basic fiduciary responsibilities when operating a retirement or health benefit plan, the Department of Labor is presenting the "Getting It Right -- Know Your Fiduciary Responsibilities" webcast series. The three-part series will help employers and service providers understand how the fiduciary responsibility provisions of ERISA apply to employer-sponsored retirement and health plans and provide information about how to avoid common problems in managing a plan.

Source: Planadviser.com, March 2022*

The System Still Fails Small 401k Plans

Anybody who has investigated the 401k system realizes that big organizations have the clout to demand and receive discounts from 401k providers, while smaller firms usually take what they are given. However, figures recently gathered through an exhaustive study of Form 5500 filings are striking.

Source: Morningstar.com, March 2022

Upcoming ERISA Cases for Benefits Attorneys to Monitor

Various ERISA cases are pending at the U.S. Supreme Court and lower federal courts that could significantly affect ERISA law. Here is an overview of the cases you may wish to monitor in the upcoming months.

Source: Hallbenefitslaw.com, March 2022

An Employer's Guide to Annual Retirement Plan Compliance Requirements

Do you have a retirement plan compliance checklist? If you think your organization doesn't need one this year, think again. Legislative and regulatory changes, as well as organizational changes, can affect your plan. To guide you in conducting a thorough review of your plan over the next few months, here is some help in creating a retirement plan compliance checklist.

Source: Usicg.com, March 2022

Further Retirement Policy Reforms Possible in 2022

As the director of policy at Principal Financial Group, Lance Schoening has spent a substantial portion of his professional life in Washington, D.C. During a recent interview with PLANSPONSOR, Schoening pointed to multiple pieces of legislation already on the table and suggested more proposals could come ahead of the midterm elections, all in time for passage during the lame-duck session at the end of the year.

Source: Plansponsor.com, March 2022

ERISA Advisory Council Pulls Back the Curtain on Brokerage Windows

The ERISA Advisory Council released a detailed report on its recent examination of brokerage windows in DC plans, previously an area of controversy due to shifting guidance from the DOL. Though the council considered several topics, its sole recommendation is for DOL to conduct additional fact-finding on "brokerage window only" plans. The DOL-appointed council can't issue guidance, but these findings may help alleviate concerns for plan fiduciaries currently offering -- or looking to offer -- a brokerage window by making the case for DOL to preserve the status quo.

Source: Mercer.com, March 2022

Retirement Savings Legislation Continues to Percolate on Capitol Hill

Among the provisions of a draft bill is one that would improve fee disclosures in defined contribution plans and another that would allow annuities as qualified investment default alternatives in plans.

Source: Investmentnews.com (registration may be required), March 2022

IRS Provides Guidance on RMDs After SECURE

Last week the IRS issued proposed regulations for RMDs incorporating the changes made by the SECURE Act in an attempt to resolve many of those issues. Although these proposed regulations do not have the force and effect of law until finalized, the IRS has announced that complying with the proposed regulations will be a reasonable, good-faith interpretation of the SECURE Act provisions and the current regulations for RMDs made in the 2021 calendar year.

Source: Graydon.law, March 2022

The 401k: Employer's Tool in Challenging Times

The Great Resignation and difficulty filling open positions are among the factors that make these bracing times for an employer. The 401k is one of the tools by which an employer can meet these challenges, argues Craig Rosenthal, Head of Strategy and Chief Marketing Officer for Fiduciary Decisions.

Source: Asppa.org, March 2022

SCOTUS Scuttles CalSavers Challenge

Despite a request -- and an apparent consideration of that request -- the nation's highest court has decided not to take on a case challenging the CalSavers state-run IRA program for private-sector workers. The Supreme Court "denied certiorari" which leaves the decision of the lower court -- and CalSavers -- intact.

Source: Asppa.org, March 2022

401k Nondiscrimination Testing: Balancing a Top-Heavy Determination

A top-heavy determination can cast a bigger shadow than it should for those who may not be aware of the rules surrounding this nondiscrimination test for qualified retirement plans. As a financial advisor, you can help business owners understand that the risk of being top-heavy doesn't have to be a barrier to sponsoring a retirement plan.

Source: Newportgroup.com, March 2022

Help Your Clients Put a Plug on Retirement Plan Leakage

If the plan metrics reveal that plan leakage is higher than the plan sponsor wants for their employees, they may want to assess whether allowing employees to access their retirement savings while employed is still aligned with their plan objectives. There are several strategies financial advisors can help plan sponsors explore to reduce leakage from their plan.

Source: Newportgroup.com, March 2022

IRS Revamps Minimum Required Distribution Rules

At long last, the Internal Revenue Service issued proposed regulations under Code section 401(a)(9) that take into account the major changes made by the SECURE Act, and make other conforming changes to the eligible rollover rules. Compliance with these rules will pose challenges of every type, communications, system redesign, and plan documentation to name the major ones. This article highlights the major changes.

Source: Groom.com, March 2022

Voluntary Fiduciary Correction Program Checklist

This checklist provides step-by-step guidance for private employers on the use of the DOL's Voluntary Fiduciary Correction Program to correct and self-report fiduciary violations or prohibited transactions under ERISA. The VFCP also provides limited Internal Revenue Code excise tax relief for certain prohibited transactions that can be corrected under the VFCP.

Source: Foxrothschild.com, March 2022

Are DOL ESG Tactics Backfiring With the 401k Fiduciary?

What the DOL's new ESG rule doesn't do is solve the real problem with ESG, namely that there's no consensus on what it means. This can have ramifications for plan sponsors and all 401k fiduciaries. Because of this, many are asking, will fiduciary liability increase?

Source: Fiduciarynews.com, March 2022

Unanimous Supreme Court Provides Victory to Plaintiffs in ERISA Fee Litigation

The U.S. Supreme Court recently issued a unanimous decision in Hughes v. Northwestern University, reversing and remanding a lower court ruling that had dismissed the case against a retirement plan sponsor. This decision reaffirms that ERISA fiduciary duty of prudence requires continuous monitoring of all investment options under a plan, especially when lower-cost share classes are available for funds.

Source: Employeebenefitslawreport.com, March 2022

On the Hunt for Good Fiduciary Processes? What to do After the Supreme Court Decision in Hughes

The Supreme Court recently handed down its eagerly-awaited decision in Hughes v. Northwestern University. Plan sponsors and 401k and 403b plan administrators had hoped the decision would create clearer pleading standards to free them from the endless line of ERISA class actions alleging fiduciary malfeasance when selecting investment menus and plan service providers. It didn't and now those fiduciaries have some more thinking to do.

Source: Cohenbuckmann.com, March 2022

DC Plans Continue Laser-Focus on Fees, Exclusive Callan Survey Finds

Defined contribution plan sponsors will continue their sharp focus on fees, according to Callan's 2022 Defined Contribution Trends Survey, but they also will be taking a close look at their investment policy statements and conducting formal fiduciary training in the coming year.

Source: Callan.com, March 2022

Schwab Report: Self-Directed 401k Balances Higher

According to Charles Schwab's latest SDBA Indicators Report, the average account balance across all participant accounts finished Q4 2021 at $352,764, a 6.4% increase year-over-year and a 3.4% increase from Q3 2021.

Source: Businesswire.com, March 2022

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