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April 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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Fidelity's Bitcoin 401k Offering Prompted a Plan Sponsor to Examine Plan Exposures

Plan sponsors offering bitcoin in-plan as part of the core investment menu would expose the plan, investment committee, and plan participants to myriad risks, says Jerry Schlichter, managing partner at Schlichter Bogard & Denton, who has made a practice of suing plan sponsors for fiduciary breach. Plan sponsors could be vulnerable to greater litigation risks from the plaintiffs' bar, he explains. Plan sponsors immediately checked with their plan adviser to know if there is any potential cryptocurrency exposure.

Source: Planadviser.com, April 2022*

What Assets Belongs in 401k Plans?

The author writes, "First, 401k plans are privileged. They enjoy a tax benefit, courtesy of the government. In exchange for its benefit, the government has the right to oversee how those plans are run. Second, 401k regulation operates largely through trial and error. Defense lawyers police plan sponsors by filing lawsuits. The process is inefficient. Adding bitcoin and private-equity funds as plan options would spur more suits, thus incurring more waste."

Source: Morningstar.com, April 2022

Risks of Cryptocurrencies in 401k Plans From the Plan Auditor Perspective

Cryptocurrency. The word brings up thoughts of potential wealth, mystery, and hi-tech. It's the sexy new kid on the block for a new generation of investors. It's one of the current hot topics in the 401k plan industry. It also brings a lot of questions and investment risks. Despite these questions and risks, the popularity of wanting cryptocurrency investments in 401k plans is growing. Before plan fiduciaries think about adding crypto to their 401k plan, they need to consider the three risks and issues reviewed here, which far outweigh any potential benefits to the plan participants.

Source: Linkedin.com, April 2022

Popular Retirement Funds Suffer as Tech Stocks Plunge

Anyone who dares peek at their 401k can see the carnage. Many popular funds in workplace retirement savings plans are down more than 10% so far this year. Some are even in, or approaching, bear market territory. Many growth-oriented stock funds offered in 401k plans are down more than 10% so far this year.

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

SECURE 2.0 Could Mean Significant Changes to Retirement Savings Plans

On March 29, 2022, the U.S. House of Representatives overwhelmingly passed the Securing a Strong Retirement Act of 2022 (HR 2954), which would significantly change retirement plans to further promote retirement savings. The bill is now with the U.S. Senate, where modifications are expected.

Source: Buck.com, April 2022

Proposed Changes to Prohibited Transaction Exemption Procedures: White Paper

Congress provided for three kinds of possible exemptions from prohibited transaction prohibitions: statutory exemptions, class exemptions, and individual exemptions. The DOL has long had regulations setting forth the procedures for applying for class and private exemptions and has granted many such exemptions over the last 48 years. Now, however, the DOL is proposing changes to its procedures that would significantly modify the process and create additional burdens on applicants and independent fiduciaries covered by the exemption.

Source: Wagnerlawgroup.com, April 2022

Employers Less Sure that Traditional Target-Date Funds Meet Employees' Retirement Needs

Employers are also increasingly concerned about their employees not saving enough for retirement (66% in 2022 v. 57% in 2020) and risking outliving their savings (63% in 2022 v. 58% in 2020). Almost three-quarters of employers (72%) now say they are highly interested in a new generation of TDFs that gear towards some allocation of lifetime income. Here are the full survey results.

Source: Tiaa.org, April 2022

DOL Has 'Grave Concerns' With Fidelity's Bitcoin 401k Move: WSJ

Fidelity's plan to allow investors to put Bitcoin in their 401k accounts risks the retirement security of Americans, the Labor Department told The Wall Street Journal. "We have grave concerns with what Fidelity has done," Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told The Journal in an interview.

Source: Thinkadvisor.com, April 2022

Fidelity Shrewdly Side-Steps DOL's 401k Crypto Guidance and ERISA

Fidelity caught the industry off guard by revealing that 22,000 employers who use its 401k recordkeeping service can, by this summer, start offering Bitcoin right alongside ETFs in plans. The $12-trillion Boston firm shocked everyone with the timing of the "seminal" move, the DOL's tut-tutting guidance notwithstanding, after concluding Bitcoin's volatile days are behind it.

Source: Riabiz.com, April 2022

Annual 401k Benchmarking Data on Participant Behavior and Plan Design Published

T. Rowe Price released "Reference Point," its annual 401k benchmarking report featuring year-over-year data and analysis on participant behavior and plan design. The report is based on the firm's full-service recordkeeping client data. Key findings are reviewed here.

Source: Prnewswire.com, April 2022

Guaranteed Income Options May Boost Retirement Confidence

More employers are starting to question whether traditional target-date funds -- the default retirement-plan option for millions of Americans -- are setting up employees for success after they stop working, according to TIAA's newly released 2022 Retirement Insights Survey. Interest in access to guaranteed lifetime income in retirement rose during the pandemic, but education and adoption have been slow.

Source: Planadviser.com, April 2022

EBRI: Challenges Aside, Retirement Confidence Remains High

Despite the pandemic and inflation, American workers and retirees remain optimistic about living a comfortable retirement and one key factor that has helped is having a workplace retirement savings plan. This is according to the 32nd annual Retirement Confidence Survey measuring worker and retirement confidence conducted by the Employee Benefit Research Institute and Greenwald Research. In fact, in 2022, 82% of workers who are offered a workplace retirement savings plan are satisfied with it, a finding that has remained steady from 2021.

Source: Napa-net.org, April 2022

DOL Pushes Back on Crypto, SDBA Concerns

The Department of Labor isn't backing down on its cryptocurrency concerns, but a written response to U.S. Sen. Tommy Tuberville includes some comments concerning its application to self-directed brokerage windows. The DOL's April 30 response to Tuberville's letter to Labor Secretary Marty Walsh from Acting Assistant Secretary of Labor Ali Khawar regarding the Compliance Assistance Release on cryptocurrency reiterates the motivation for the release.

Source: Napa-net.org, April 2022

Summary of House-Passed SECURE 2.0 Legislation

On March 29, the House overwhelmingly passed H.R. 2954, the Securing a Strong Retirement Act of 2021, by a vote of 414-5. The SSRA contains provisions from the version of the bill approved by the House Ways and Means Committee in May 2021 and from the Education and Labor Committee's RISE Act (H.R. 5891) approved in November 2021. This article contains Groom's summary of the legislation as passed by the chamber.

Source: Groom.com, April 2022

Webcast: Why Fiduciary Liability Insurance Is Needed More Than Ever

Litigation arising from the management of employee benefit plans has increased dramatically in recent years notably "excessive fee" litigation. New federal laws, regulations, guidelines, and established case law are expected to escalate the risks in 2022 and beyond. What should you do from an insurance perspective?

Source: Fiducientadvisors.com, April 2022

Ten Things to Consider When Implementing ESG in Your DC Plan

The DOL may be close to lowering barriers that historically created a chilling effect on the inclusion of Environmental, Social, and Governance investment options in defined contribution plans. For the first time, there may be a rule that specifically contemplates the inclusion of investment options on the basis that ESG factors can and often should be viewed as economic factors on the same footing as other financial factors. The industry has awaited such a moment and if the DOL's rule proposal is adopted, there will be no time to lose.

Source: Schroders.com, April 2022

30% of Canadians Relying on Workplace Pension as Primary Source of Retirement Income: Survey

Almost a third (29 percent) of Canadians believe their employer-sponsored pension plan will be their primary source of retirement income, while 15 percent said they're relying on government pension plans, according to Lifeworks' latest financial well-being index. The survey, which polled 3,000 Canadian employees, found the overall financial well-being score decreased slightly to negative 2.4 from negative 2.3. Two-thirds (67 percent) said they're questioning how much money they'll need in retirement and, among these respondents, 44 percent said they're unsure and 23 percent said they didn't know.

Source: Benefitscanada.com, April 2022

Retirement Plan Legislative Update: Act 1 -- Bipartisan Budget Act

The world has gone through many sudden and unpredictable changes in the last few years. The retirement plan industry has seen many changes, as well, which has had impactful legislation and guidance that changed the retirement landscape in many positive ways. With all these changes, it seems the world and retirement plan industry is part of a storied Shakespearian plan in which we are waiting to find out if it's a comedy or tragedy. Each bit of legislation and regulatory guidance seems to be an act of our play. The legislation and guidance have come at a quick pace, but this story starts in 2018, which is five years behind us already.

Source: Belfint.com, April 2022

Bipartisan Bill Would Allow Plan Asset Reimbursement for Plan Design Expenses

The Increasing Small Business Retirement Choices Act, introduced April 26 by Sens. Jacky Rosen and Tim Scott, would amend existing law to allow small business employers to use retirement plan funds to pay expenses associated with retirement plan design changes, lowering the cost of providing better plans to workers. Currently, employers that offer 401k retirement plans and want to consider a plan design change, such as auto-enrollment or auto-escalation, must pay upfront out-of-pocket administrative costs.

Source: Asppa.org, April 2022

Employer Skepticism of "Traditional" Target-Date Funds Grows

Concerns from employers over the effectiveness of what it calls traditional target-date funds in achieving successful retirement outcomes are on the rise, according to new research from TIAA. The survey revealed that 66% of employers feel TDFs will help employees meet their retirement income needs, down from 78% in a previous survey in 2020.

Source: 401kspecialistmag.com, April 2022

Colorado-New Mexico Auto-IRA Program

Colorado and New Mexico recently created a historic partnership, signing a Memorandum of Cooperation for their auto-enroll IRA programs. The first multi-state auto-IRA program projects it will provide new retirement plan access to more than a million residents of the states.

Source: 401kspecialistmag.com, April 2022

IRS Provides Sample Language for 403b Plan Provisions

The IRS has published an information package that contains samples of plan provisions that have been found to satisfy certain requirements of Internal Revenue Code Section 403b and related regulations. The IRS says it has prepared the package to assist providers that are drafting 403b pre-approved plans, and to accelerate the agency's review of them.

Source: Planadviser.com, April 2022

What the Great Resignation Means for 401k Accounts

United States workers are continuing to leave their jobs and employers are struggling with high levels of employee turnover. How are the issues related to what is now called the "Great Resignation" affecting plan sponsors? The current environment not only makes it hard to build and manage an effective workforce, but plan sponsors may also face problems down the road when departing workers leave their 401k balances in the plan.

Source: Orba.com, April 2022

DC Plan Participants Maintain Commitment to Saving

Despite ongoing challenges bought about by the pandemic, 2021 withdrawal and contribution data indicate that essentially all DC plan participants continued to save in their retirement plans at work. Only 2.2% of DC plan participants stopped contributing in 2021, compared with 2.3% in 2020 and 3.4% in 2009, according to an Investment Company Institute study. And it is possible that some of these participants stopped contributing simply because they reached the annual contribution limit, the report notes.

Source: Ntsa-net.org, April 2022

Improving the Process to Distribute Retirement Benefits Pursuant to a QDRO

One of the hurdles to the sufficient accumulation of retirement savings for the achievement of retirement security is the loss of retirement savings in divorce. Plan administrators are required by law to follow prudent procedures to administer the assignment of retirement benefits under a QDRO. Yet, questions remain as to the extent to which affected parties understand the QDRO process and whether obtaining one is affordable so that its intended goals are met.

Source: Mintz.com, April 2022

IRS Updates LRMs for 403b Plans

The IRS recently issued an updated Listing of Required Modifications and Information Package for 403b plans. These LRMs contain quite a few changes, from simple clarifications and explanatory notes to more substantive revisions to plan language reflecting changes arising from the PATH, SECURE, and CARES Acts. While the LRMs are intended for 403b plans that use "pre-approved" plan documents, sponsors of individually designed 403b plans also frequently look to the LRMs for insight into what the IRS views as acceptable plan language. This article points out some of the more noteworthy changes in the latest LRMs.

Source: Groom.com, April 2022

The Ninth Circuit Reversals of the Salesforce and Trader Joe's Excessive Fee Cases

Nearly every court that has decided a motion to dismiss in an excessive fee case following the January 26 Northwestern Supreme Court opinion has allowed the complaint to proceed to discovery. A North Carolina court in the Shoe Show case went so far as to rule that it is an issue of fact as to whether a $40 million plan has sufficient bargaining leverage to reduce recordkeeping fees. And now the Ninth Circuit piles on by reversing both the Salesforce and Trader Joe's dismissals of excessive fees cases.

Source: Euclidspecialty.com, April 2022

Finding Missing Participants: The DOL's Prescription

Missing and nonresponsive participants are a liability for any retirement plan. Undelivered notices, uncashed checks, and unreturned election forms all create compliance issues and additional administrative expenses. Unfortunately, a participant's "radio silence" gives the plan no relief from the obligation to keep accurate records and take appropriate steps to ensure that the participants and beneficiaries are paid their full benefits when due. The DOL has some reader-friendly advice for plan administrators. Here are the highlights.

Source: Erisadc.com, April 2022

Considerations for DC Plan Sponsors Integrating ESG Investments

Challenges for plan sponsors with participants showing greater interest in sustainable investment and ESG funds are myriad, according to industry experts. Plan sponsors must determine the plan's ESG philosophy and goals for sustainable investing and communicate these to plan participants. But plan sponsors' communication with and education of participants must account for fiduciary obligations, and not constitute investment advice under the ERISA.

Source: Plansponsor.com, April 2022*

Excessive Fee Lawsuit Will Proceed Against Xerox

The breach of fiduciary duty lawsuit against Xerox Corporation's 401k retirement plan fiduciaries will proceed after a District Court denied the defendants' motion to dismiss the complaint. The complaint alleged a breach of fiduciary duty obligations and excessive fees for recordkeeping services.

Source: Planadviser.com, April 2022

401k Compliance Check: Required Participant Notices

This piece focuses on the variety of typical notices that are required for 401k retirement plans. Failing to provide required notices can subject the plan, and its fiduciaries, to liability. Notice failures can result in penalties imposed by the IRS or DOL, or lawsuits from participants who were not informed about important information that affected their decision-making.

Source: Foley.com, April 2022

OregonSaves Has "Meaningfully Increased Employee Savings," Study Says

OregonSaves, the state-run program which provides employees in the Beaver State with retirement benefits if their employers do not, was the first such program to begin operating in the United States. A recent study assessed how well it is doing, and researchers have some good news for its advocates.

Source: Asppa.org, April 2022

Cybersecurity Risks: Where We Are and Steps to Take

Cyber criminals are as innovative as those who develop and refine the technology they manipulate, and now their targets include the retirement industry. Experts in a recent panel, and also in a report, weighed in on the tricks those criminals use and strategies that can help thwart them.

Source: Asppa.org, April 2022

401k Cybersecurity Risk Increases with Remote Workforce

401k cybersecurity risk exists for all retirement plans. However, having a remote workforce exponentially increases 401k cybersecurity risk. Remote employees present employers with multi-point networking exposure that has grown to be one of the bigger concerns about cybersecurity. The proliferation of remote workers can be traced back to the early stages of the Covid-19 pandemic. A new study shows that employers have work to do when it comes to mitigating 401k cybersecurity risk.

Source: 401ktv.com, April 2022

Ninth Circuit Court of Appeals Revives Two 401k Fee Cases, Potentially Making It More Difficult for Plan Fiduciaries to Obtain Early Dismissal

Plaintiffs in "excessive fee" lawsuits commonly allege that plan fiduciaries selected and retained investment options that were overly priced and underperformed against their benchmarks, and that plan recordkeeping fees were unreasonably high. While fiduciary defendants have obtained recent early wins in this litigation by challenging the plausibility of the plaintiffs' allegations, these Ninth Circuit decisions bucked those trends and gave significant deference to the plaintiffs' claims. Both opinions took a strict approach in accepting all of the plaintiffs' allegations as true for purposes of ruling on the defendants' motions to dismiss; and, if they stand, they could make it easier for plaintiffs to proceed past the early pleading stage and attempt to develop their cases through discovery.

Source: Truckerhuss.com, April 2022

Employers and CalSavers, How Are They Responding?

CalSavers, the program in the Golden State that provides retirement plan coverage for those whose employers do not, has been in operation for three years now. Employers have a key role in how the program works; how are they responding?

Source: Napa-net.org, April 2022

401k Excessive Fee Suit Tossed

A 401k excessive fee case was dismissed for failing to make a case sufficient to go to trial, but given a chance to remedy that situation.

Source: Napa-net.org, April 2022

Kroger Demands Dismissal of Proposed ERISA Class Action Over Recordkeeping Fees

Kroger asked an Ohio federal court to dismiss a proposed class-action lawsuit in which workers claim that they paid excessive, unreasonable, and undisclosed annual recordkeeping fees to participate in the employer's retirement savings plan. According to Kroger, employees paid reasonable yearly fees in line with federal law and received annual fee disclosures stating the yearly expense ratios.

Source: Hallbenefitslaw.com, April 2022

Oops! We're in a Controlled Group of Companies. What Happens to Our 401k Plan Now?

Whether you made the mistake of thinking that you were or were not in either a controlled group of companies or an affiliated service group, your plan will have fundamental tax qualification issues that must be corrected before you wind up in an IRS audit. Here is what to be on the lookout for.

Source: Employeebenefitslawgroup.com, April 2022

Additional 403b Plan Document Guidance Released

The IRS has released a revised Section 403b Pre-Approved Plans Listing of Required Modifications and Information Package, which includes sample plan provisions to assist drafters of 403b pre-approved plan documents in satisfying the requirements of Internal Revenue Code Section 403b and associated regulations.

Source: Ascensus.com, April 2022

Retirement Reimagined Study

Millennials have an evolving vision of retirement, different from previous generations, according to Schwab's new Retirement Reimagined Study that uses advanced predictive modeling techniques to forecast key differences in how Millennials, Gen X, and Boomers will approach saving for and living in retirement. The first of its kind study also projects four distinct retirement personas that Millennials could fall into as many of them transition to retirement around 2050.

Source: Schwab.com, April 2022

Putting a Little PEP in a 401k Retirement Plan

Set against the backdrop of the continuing wave of ERISA litigation that is being brought against employers who sponsor retirement plans, Pooled Employer Plans ("PEPs") are emerging in the marketplace as an alternative that may limit employers' risk of retirement plan-related litigation. There have been over 220 ERISA class action suits filed in connection with retirement plans since 2018, and the top ten ERISA settlements for 2021 alone totaled $840 million in the aggregate. Since ERISA litigation is a serious and relevant concern, many plan sponsors, including private equity sponsors and their portfolio companies, would benefit from evaluating whether a PEP is a viable retirement plan solution for them.

Source: Ropesgray.com, April 2022

Washington University ERISA Lawsuit Reaches Settlement

A settlement agreement has been struck in the ERISA lawsuit filed against Washington University in St. Louis in the U.S. District Court for the Eastern District of Missouri. Though the defendants admit no wrongdoing in the settlement agreement, they have agreed to pay $7.5 million into a gross settlement account from which the funds will be distributed to class members and used to pay the plaintiffs' sizable attorneys' fees.

Source: Planadviser.com, April 2022

SEC Cautions Advisers Against "Extraneous" Use of Term "Fiduciary"

Informal guidance issued by the SEC cautions investment advisers about their use of the term "fiduciary" on Form CRS, but an industry group argues the guidance goes too far.

Source: Napa-net.org, April 2022

401ks Still Seen as Gateway for Black Investors, but New Risks Emerging

While 401k plans have been the gateway to investing for many black Americans over the last several decades, that finding does not appear to be as prominent, as risky investments grow in popularity, a new survey finds.

Source: Napa-net.org, April 2022

DOL Issues Guidance on Cryptocurrency Retirement Plan Investments

The DOL issued guidance relating to cryptocurrency as an investment option in participant-directed 401k plans. It was the closest the DOL has ever come to saying "No way!" on a fiduciary issue. Here is a rundown on the guidance.

Source: Mcdonaldhopkins.com, April 2022

Research Finds Americans Overwhelmingly Preserved Retirement Nest Eggs in 2021

The majority of DC plan retirement savers continued saving for retirement in 2021 through their DC plans such as 401ks, according to ICI's "Defined Contribution Plan Participants' Activities, 2021." The study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 35 million participant accounts in employer-based DC plans at the end of December 2021.

Source: Ici.org, April 2022

DOL Issues New Cryptocurrency and Brokerage Window Guidance

Recently, the DOL issued new guidance regarding the holding or investing in cryptocurrency by 401k retirement plans. This new guidance specifically impacts retirement plans that permit participants to use self-directed brokerage accounts to trade individual stocks on their own. Under the new guidance, employers could have fiduciary responsible for participant cryptocurrency trades made through their self-directed accounts.

Source: Graydon.law, April 2022

Ninth Circuit Revives Second Excessive Fee 401k Plan Litigation

For the second week in a row, the Ninth Circuit reversed the dismissal of a 401k plan excessive fee litigation challenging the offering of retail share classes of mutual funds instead of cheaper institutional share classes.

Source: Erisapracticecenter.com, April 2022

New York Federal District Court Dismisses 401k Fee Class Action

A New York district court recently dismissed, without prejudice, a 401k plan participant's putative class action complaint alleging breaches of fiduciary duty. The plaintiff alleged that the plan fiduciary defendants breached their duties of prudence and loyalty by failing to properly monitor the plan's costs. This decision may provide a roadmap on how district courts can address complaints alleging breaches of fiduciary duty which fail to explicitly provide the formula used to calculate the alleged imprudent recordkeeping fees.

Source: Erisalitigationadvisor.com, April 2022

Is a Safe Harbor 401k the Right Choice?

Contrary to popular belief, an employer-sponsored retirement plan is more than just a benefit for employees; there are many ways the plan sponsor can benefit as well. From attracting and retaining key employees to tax-deductible contributions and expenses, a retirement plan is a benefit that can work well for everyone involved. Despite the benefits, it can be difficult to sort through all the information out there and truly know which plan is best for you and your business. This guide explores the pros and cons of the safe harbor 401k and how to decide if it's the right option for you.

Source: Planpilot.com, April 2022*

Victim of an "Excessive" Investment Fee Case Has Low-Cost Vanguard Target-Date Funds

The plaintiffs, in this case, assert that a few active funds are imprudent, but do not disclose that the plan's QDIA with the majority of plan assets is invested in the Vanguard index target-date funds, the gold standard of institutional investments. The author writes, "This is the third time in the last month that the plaintiff excessive fee bar has filed a misleading complaint alleging excessive investment fees against a plan with overall low investment costs."

Source: Euclidspecialty.com, April 2022

Don't Be Fooled by These 401k Conflicts of Interest

401k conflicts of interest misalign the interests of employers and 401k providers. While employers have a fiduciary responsibility to choose a 401k provider with "reasonable" administration fees and cost-efficient investments to make retirement as affordable as possible for plan participants, conflicted 401k providers have a financial incentive to push overpriced administration services and investments when lower-priced - but otherwise comparable - alternatives are available. How do employers avoid this trap? Here are four ways a 401k provider can profit unduly at the expense of plan participants.

Source: Employeefiduciary.com, April 2022

A Higher Level of Fiduciary Oversight Could be Required for 401k Plan Brokerage Windows

Fiduciaries of 401k plans and other retirement plans know that they must prudently monitor the investment options available to participants in the plan, but are they monitoring participants' investments made through a plan's brokerage window? Recent commentary from the DOL on cryptocurrency investments suggests maybe fiduciaries should be and that the DOL may check in on that soon.

Source: Employeebenefitslawblog.com, April 2022

Ninth Circuit Gives Excessive Fee Plaintiffs Another Chance

In the first ruling since the Supreme Court's Hughes v. Northwestern University decision, an appellate court has resurrected a plaintiffs' case in an excessive fee case that had been rejected at the district court level.

Source: Asppa.org, April 2022

Industry Groups Push Back on Recent DOL Rulemaking Practices

Spurred by the recent cryptocurrency "compliance assistance release," nearly a dozen industry trade groups -- including the U.S. Chamber of Commerce -- have expressed concern about "a trend at EBSA away from rulemaking based on a robust notice and comment process."

Source: Asppa.org, April 2022

A First Look at Secure 2.0: New Requirements for Plan Sponsors

The U.S. House of Representatives passed H.R. 2954, entitled "Securing a Strong Retirement Act," which would, among other things, impose additional requirements on employers that sponsor 401k and 403b plans. Secure 2.0 has not yet been passed by the Senate and is likely to change if passed by the Senate. Nevertheless, this is an overview of some of the provisions included in the House version of Secure 2.0 provides a preview of the types of changes that retirement plans sponsors may be required (or permitted) to implement, as early as this year or in 2023.

Source: Workforcebulletin.com, April 2022

When Recordkeepers Merge

Businesses that provide recordkeeping services to defined contribution retirement plans are merging at a dizzying rate. What considerations should plan sponsors resolve when a competitor or aggregator acquires their recordkeeper or third-party administration firm?

Source: Rolandcriss.com, April 2022

IRS Proposes Amendments to the RMD Rules

The IRS published proposed amendments to the rules on required minimum distributions, addressing changes made by the SECURE Act. The IRS's proposed rules are complicated and lengthy -- running to 64 pages in the Federal Register -- and individuals and their advisors will need time to fully digest them. While the proposed rules shed light on many important areas, this article will focus on the parts that address the SECURE Act's changes to required distributions to beneficiaries.

Source: Jpmorgan.com, April 2022

New Crypto Guidance Rewrites Rules on 401k Brokerage Window

New cryptocurrency guidance from the DOL threatens to upend the way regulators treat workplace retirement plans that allow participants to trade individual stocks and bonds on their own. Brokerage windows historically have been mostly off-limits to DOL regulators. That could change with the Labor Department's new playbook for cryptocurrency in 401ks.

Source: Bloomberglaw.com, April 2022

Study Finds Wide Range in 403b Plan Fees

A key finding of a recent GAO study is that fees for 403b plans varied widely. The agency surveyed ERISA and non-ERISA plan sponsors and service providers and reviewed the most recent Form 5500 data. It noted in its report that non-ERISA 403b plans are not required to file a Form 5500 with the Department of Labor, making it difficult to get information about this segment of the market.

Source: Plansponsor.com, April 2022

How You Deal With 401k Plan Provider Cold Calls

As a 401k plan sponsor, the details of your plan on your annual Form 5500 are available to be publicly viewed. There is a whole cottage industry within the retirement plan industry where details of your plan are sold to plan providers that want information for plan prospecting. So expect the phone calls, emails, and even regular mail from plan providers that want your business. This article is all about how to deal with plan providers that are contacting you for your business.

Source: Jdsupra.com, April 2022

OECD Issues Recommendations for the "Good" Design of DC Retirement Plans

Because DC retirement plans have increasingly become an integral, if not the main, part of most countries' overall pension systems, the Organization for Economic Co-operation and Development recently issued several recommendations for the implementation and management of these plans. The recommendations are intended to build trust in the design of DC plans by ensuring that the best interest of plan participants is considered, as well as to improve the robustness of retirement systems.

Source: Georgetown.edu, April 2022

Ninth Circuit Revives Fee Challenge to Salesforce.com 401k Plan

The Ninth Circuit became the first circuit court to rule in a 401k plan fee and investment litigation following the Supreme Court's January 2022 decision in Hughes v. Northwestern University. In Davis v. Salesforce.com, Inc., the Ninth Circuit, without discussing Hughes, upheld the viability of the types of claims that Hughes reinstated and remanded for further review.

Source: Erisapracticecenter.com, April 2022

Proposed IRS RMD Regulations Present Challenges, Risks for 403b Plans

The IRS is strategically working to execute the statutory changes that were outlined by the SECURE Act of 2019. However, the IRS's efforts to streamline the required minimum distribution requirements for 403b plans with Section 401(a) qualified plans, such as 401k plans, may have unforeseen challenges and risks.

Source: Employeebenefitsblog.com, April 2022

More 401k Participants Say Having ESG Options Could Inspire Them to Increase Contribution Rate

According to the Schroders 2022 U.S. Retirement Survey, 74% of defined contribution plan participants who lack or don't know if they have ESG investment options in their plan, said they would or might increase their contribution rate if offered ESG options. This is up from 69% who said the same in 2021.

Source: Businesswire.com, April 2022

How to Help 401k Plan Sponsors Cut Through ESG Confusion

When it comes to Environmental, Social, and Governance investing, regulatory changes are a big source of confusion for advisors and plan sponsors. "It's no surprise," said Bonnie Treichel, Chief Solutions Officer at Endeavor Retirement, "the apparent ESG regulatory back-and-forth over the past several years is enough to make even an ERISA attorney's head spin." The good news: When it comes to ESG, she's confident that advisors and plan sponsors can move forward.

Source: 401kspecialistmag.com, April 2022

When Providers Use Plan Participant Data for Purposes Unrelated to a Plan: What Fiduciaries Need to Know

There is a growing trend of using participant data to cross-sell financial products unrelated to plan recordkeeping by large recordkeepers and asset custodians of employer-sponsored retirement plans. In light of the fact that plan fiduciaries are ultimately legally responsible for the management and mismanagement of a retirement plan, this trend to use participant data may raise issues for employers in their role as plan sponsors and fiduciaries.

Source: Ogletree.com, April 2022*

Get Ready to Explain Lifetime Income Illustrations

Highlights and discussion around the question, "When are the new lifetime income illustrations due and what should I be telling my clients who are 401k sponsors and participants about them?"

Source: Napa-net.org, April 2022

The Role of White Label Funds in Today's DC Plans

Using multi-manager white label investment funds in a defined contribution plan's core lineup can potentially bring significant diversification and return advantages over conventional single-manager funds.

Source: Wtwco.com, April 2022

401k Auto-Enrollment Proves Popular

Legislation moving through Congress would prompt more employers to automatically enroll new employees in 401k or similar defined contribution retirement plans and to increase participants' savings rates over time. Even without new mandates to do so, however, more employers are adopting automatic features to increase employee participation and to encourage employees to save enough for a secure retirement.

Source: Shrm.org, April 2022

Wells Fargo Agrees to Pay $32.5 Million to Settle ERISA Suit

Parties in a lawsuit against Wells Fargo 401k plan fiduciaries have filed a motion for preliminary approval of a settlement. The lawsuit accused Wells Fargo of using its 401k plan to seed new proprietary funds, among other things.

Source: Planadviser.com, April 2022

CITs Have Different Fiduciary Implications Than Mutual Funds

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: Planadviser.com, April 2022

Blackstone Says Alternative Assets Are Headed for Your 401k

Alternative assets will eventually find their way into 401k plans, predicted Joan Solotar, global head of private wealth solutions at Blackstone Inc. Alternative assets like real estate, private debt, and private equity are seen as a way to diversify and earn returns uncorrelated to traditional financial markets. They were once the sole purview of large institutional investors who don't need assets to be particularly liquid, but the creation of liquidity in certain alternative products aimed at retail investors has broadened their appeal.

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

Former Goldman Sachs Workers Achieve Class Status in 401k Mismanagement Case

U.S. District Judge Edgardo Ramos granted class status to tens of thousands of Goldman Sachs Group Inc. ex-employees in an ERISA suit related to the mismanagement of its employee 401k plan. In support of its motion to certify the class, Falberg also pointed to other courts which recently have certified ERISA classes of retirement plan participants suing financial services providers for unfairly promoting proprietary funds in their plans.

Source: Hallbenefitslaw.com, April 2022

The Humana Excessive Fee Case Allowed to Proceed Despite Low Recordkeeping Fees Negotiated in Competitive RFPs

The original model of an excessive fee lawsuit under ERISA was to allege that the plan fiduciary committee failed to conduct a request-for-proposal to ensure that the plan had the lowest possible costs. But plaintiff law firms are now challenging plans that negotiated low fees based on competitive bidding. They know it is worth the minimal cost to file a lawsuit because if they can somehow get passed a motion to dismiss, they have settlement leverage based on large-plan damage models that are, in the words of a leading plaintiff firm, "astronomical." The only protection for plan sponsors is the "careful, context scrutiny" that federal court judges are required to perform to protect plan fiduciaries.

Source: Euclidspecialty.com, April 2022

401k, 403b, 457b: Why Are the Rules Different?

Why should the rules that determine how and how much a person can save for retirement be different depending on whether the person works for a government entity, a nonprofit, or a for-profit employer? People are people, and their retirement needs are not different based on what type of entity employs them. Well, it is what it is and we cannot control it, so we may as well embrace it.

Source: Belfint.com, April 2022

Time to Reset the Advisor-TPA Partnership

What should advisors be asking their TPAs? What should they be getting from them? What makes the difference between a good TPA and a bad one? And how can advisors and TPAs improve their working relationship and serve plan sponsors as a cohesive team? This panel discussion at the 2022 NAPA 401k Summit provides an interesting perspective on the relationship between TPAs and advisors, their work and connections, and the approach and mindset advisors follow. TPAs may find this information and insight useful and instructive.

Source: Asppa.org, April 2022

Auto-Enrolled 401k Loan Protection Has Potential to Save $2 Trillion

Auto-enrolled 401k loan protection is a powerful tool to preserve retirement savings, according to new research from the Employment Benefit Research Institute and Custodia Financial. The study shows a remarkable $1.96 trillion in retirement savings can be preserved if employers automatically enroll employees in 401k loan protection when they borrow from their defined contribution retirement plans.

Source: 401kspecialistmag.com, April 2022

House Committee Advances 401k Spousal Consent Bill

One week after the House passed SECURE 2.0, the House Education and Labor Committee advanced The Protecting America's Retirement Security Act (H.R. 7310) on Tuesday. It purports to strengthen the retirement system to protect workers' retirement savings and better support families and employers.

Source: 401kspecialistmag.com, April 2022

Attorney Calls Proposed Changes to RMDs From 403bs "A Big Deal"

A change to required minimum distribution rules for 403b retirement plans proposed by the IRS is causing industry chatter. Proposed changes would require a participant to take calculated amounts from each 403b contract they have.

Source: Planadviser.com, April 2022

403b Assets Up, but Fees Can Have Big Effect, Says GAO

The parties in an excessive fee suit focused on the adoption of collective investment trusts have come to terms. The suit alleges that "defendants selected and retained Wells Fargo products over materially identical, yet cheaper, non-proprietary alternatives; selected Wells Fargo products that had no performance history that could form the basis of a fiduciary's objective decision-making process; and failed to remove proprietary funds despite sustained underperformance." More specifically, the plaintiffs took issue with the use of target-date CITs with a relatively short (less than three years) track record.

Source: Ntsa-net.org, April 2022

Wells Reaches Excessive Fee Deal

The parties in an excessive fee suit focused on the adoption of collective investment trusts have come to terms. The suit alleges that "defendants selected and retained Wells Fargo products over materially identical, yet cheaper, non-proprietary alternatives; selected Wells Fargo products that had no performance history that could form the basis of a fiduciary's objective decision-making process; and failed to remove proprietary funds despite sustained underperformance." More specifically, the plaintiffs took issue with the use of target-date CITs with a relatively short (less than three years) track record.

Source: Napa-net.org, April 2022

Broad "SECURE 2.0" Retirement Bill Gets Overwhelming House Approval

The wide-ranging bill contains provisions aimed at expanding plan coverage, boosting savings, increasing lifetime income options, and streamlining plan administration. Several revenue-raising proposals would direct more workplace savings into after-tax Roth accounts. In addition, the DOL would have to review its fiduciary guidance for defined benefit pension risk transfers. This article highlights key SECURE 2.0 provisions of interest to employers.

Source: Mercer.com, April 2022

Just Adopted a New 401k Plan? Beware These Common Pitfalls

By June 30, 2022, businesses with five or more California employees must either enroll in CalSavers, a state-managed system of Roth IRA accounts or establish their exemption from CalSavers by adopting 401k. Other states have implemented or are rolling out similar auto-IRA programs. This article covers some potential pitfalls for new plan adopters, and, where possible, steps to avoid these pitfalls.

Source: Eforerisa.com, April 2022

SECURE 2.0: What Employers Need to Know

On March 29, 2022, the House of Representatives passed the Securing a Strong Retirement Act of 2022 ("SECURE 2.0", HR 2954). The vote was largely supported by both parties (414-5). The Senate will likely act on the bill later this spring. While it is expected that changes will be made in the Senate version, it is widely anticipated that the legislation will ultimately become law in some form. This article highlights a few provisions of the bill that may be of interest to employers.

Source: Benefitslawadvisor.com, April 2022

Alight Solutions 401k Index: First Quarter 2022 Observations

With volatility returning to Wall Street, 401k investors were busy traders in the first quarter of 2022, according to the Alight Solutions 401k Index. There were 16 above-normal trading days in the quarter, a stark contrast to the 3 above-normal days seen in 2021. Net transfers as a percentage of starting balances were 0.46%, nearly equal to the percentage seen in the prior twelve months (0.53%). Net trading activity significantly favored fixed income.

Source: Alight.com, April 2022

SECURE 2.0 Approved by House in 414-5 Vote

On March 29, 2022, the House of Representatives, by a nearly unanimous (414-5) vote, approved the Securing a Strong Retirement Act of 2022 (SECURE 2.0). The Senate is currently working on its version of comprehensive bipartisan retirement policy reform. Some believe there is a possibility that some combination of SECURE 2.0 and whatever the Senate produces could pass in a post-election lame-duck session. This article reviews the bill, focusing on some key provisions.

Source: Octoberthree.com, April 2022*

Federal Judge Grants Class Certification to Astellas Workers Over 401k Losses

The employees allege that violations of fiduciary duty and prohibited transactions caused them to lose millions in retirement savings. An Illinois federal judge granted class certification to three classes of Astellas Pharma US Inc. 401k retirement plan participants in their ERISA suit. The "equitable relief" class consists of all plan participants with a current account balance, about 4,000 workers. The other two classes, the "payment of plan assets" class and the "investment loss" class, consist of those workers who invested in certain funds, or about 2,500 and 2,300 workers, respectively.

Source: Hallbenefitslaw.com, April 2022

What You Should Know About the House's New 401k Legislation

Figuring that defined-contribution plans such as 401ks weren't nearly secure as they should be after the passage of the SECURE Act of 2019, Congress is taking another stab at it with the Securing a Strong Retirement Act of 2021 (H.R. 2954) or SECURE 2.0. The House passed the bill yesterday under something called suspension of the rules, which is usually reserved for uncontroversial legislation. The bill now heads to the Senate, where it will probably be amended.

Source: Businessmanagementdaily.com, April 2022

Small(er) Plan Targeted with Excessive Fee Suit

Another 401k has been charged with falling short of its fiduciary obligations and of failing to leverage its "tremendous bargaining power," though it's a smaller plan than most caught in those crosshairs. The plan, in this case, is 99 Cents Only Stores, an American deep-discount retailer operating primarily in California and the Southwest, a plan that, as of Dec. 31, 2020, had 2,715 participants with account balances and $69,907,378 in assets.

Source: Asppa.org, April 2022

Protecting America's Retirement Security Act Introduced in House

Representative Lucy McBath and five other Democratic co-sponsors have introduced the Protecting America's Retirement Security Act in the House of Representatives. The bill proposes fee disclosure improvements, increasing spousal protections, and automatic re-enrollment for defined contributions plans.

Source: Ascensus.com, April 2022

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