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August 2020 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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DOL Proposed Regulation Highlights the Risks of ESG Investing for ERISA Fiduciaries

The DOL issued a proposed regulation outlining the duties of an ERISA fiduciary when considering an investment that incorporates environmental, social, and corporate governance factors. Some believe that the DOL will likely move quickly to finalize the regulation before the end of the current administration's first term. The proposed regulation would make five basic changes to the current regulation.

Source: Verrill-law.com, August 2020*

Medical Device Manufacturer Hit With ERISA Excessive Fee Suit

Law firm Capozzi Adler has filed an ERISA lawsuit on behalf of former participants of the B. Braun Medical Inc. Savings Plan alleging plan fiduciaries failed in their duties to ensure investment fees were reasonable and not excessive. The case contains allegations similar to those in many complaints filed this year.

Source: Planadviser.com, August 2020

Examining Joe Biden's Retirement Savings Tax Credit Proposal

One of the provisions in Democratic presidential candidate Joe Biden's platform would replace the tax deduction that workers get when they contribute to their workplace retirement plan with a tax credit. Experts steeped in the retirement planning industry wonder if the Democratic candidate's proposed incentives are enough to prompt lower-income workers to save sufficiently for retirement.

Source: Planadviser.com, August 2020

Plaintiffs Press Participant Data Claims

Citing the "imminent harm of being solicited for non-Plan services," the plaintiffs in an excessive fee suit have filed a response to a motion to dismiss the case by fiduciaries of the $4.4 billion ADP TotalSource Retirement Savings Plan.

Source: Napa-net.org, August 2020

Colorado Enacts State-Run Auto-IRA Program

Most private-sector employers in Colorado that don't offer a retirement plan will have to enroll workers in a state-run, payroll-deduction IRA program, under legislation enacted earlier this summer. The legislation does not set the implementation date, so exactly when the program will get up and running is unclear.

Source: Mercer.com, August 2020

Coronavirus and Retirement Plan Extension Relief

Due to the COVID-19 pandemic, new guidance from the U.S. Department of Labor, the IRS, and the Department of the Treasury extends several deadlines for retirement plan notifications and benefit plan claims required by Title I of ERISA.

Source: Hallbenefitslaw.com, August 2020

DOL Proposed Pooled Plan Provider Registration Rule

The SECURE Act created a new structure through which completely unrelated employers can participate in a single defined contribution plan beginning on January 1, 2021. These Pooled Employer Plans must have a Pooled Plan Provider, and each PPP must register with the Department of Labor prior to beginning operations. On August 20, 2020, DOL released a proposed regulation detailing the PPP registration requirements.

Source: Groom.com, August 2020

Changes to Retirement Plan Distribution and Disclosure Information

The IRS has updated its safe harbor Special Tax Notice required to be provided to plan participants about to receive a distribution from a tax qualified plan as part of the election package. Further out on the horizon, individual account plans will be required to provide "lifetime income illustrations" on at least one benefit statement provided to participants during a 12-month period as a result of provisions included in the SECURE Act. Here are five key points for plan fiduciaries.

Source: Troutman.com, August 2020

Participant Data: A Retirement Plan Asset?

In recent retirement plan litigation, a plaintiffs' counsel attempted to make the novel argument that retirement plan participant data is a plan asset that should be afforded the same protections of ERISA that apply to other plan assets, such as monetary assets. While the argument has not yet succeeded in the courts, some settlements have included terms involving restrictions as to the use of plan data. Is plan data considered a plan asset under ERISA?

Source: Cammackretirement.com, August 2020

Generational Views on Financial Advice, Investing, and Retirement

A new Vanguard survey finds millennials are redefining retirement. This age cohort is challenging traditional norms like retiring at the target age of 65 and are instead aspiring to retire early or pursue a new career after reaching retirement age.

Source: Vanguard.com, August 2020

More Employees are Taking Coronavirus-Related Distributions

The U.S. opened up retirement plans for participant withdrawals under the CARES Act, to act as a temporary solution for those without emergency savings. Almost a quarter of U.S. workers (22%) have borrowed money from their retirement accounts. That's what American Consumer Credit Counseling found in its new financial health index, which measured financial confidence among workers.

Source: Planadviser.com, August 2020

DOL Presses Forward With Lifetime Income Disclosure in DC Plans

The DOL issued an interim final rule implementing Section 203 of the Setting Every Community Up for Retirement Enhancement Act of 2019, which requires an annual lifetime income disclosure for 401k and other ERISA defined contribution plan participants. This article reviews the key takeaways.

Source: Groom.com, August 2020

IRS Offers New Guidance for Qualified Plan Loan Offsets

Earlier this week the IRS issued proposed regulations regarding an extension of the rollover period for certain plan loan offset amounts. The proposed rules implement portions of the Tax Cuts and Jobs Act, which provides for an extended rollover period for a Qualified Plan Loan Offset, which is a type of plan loan offset. Even though the rules are proposed, they can be relied on immediately, and it is important to know what is in them.

Source: Graydon.law, August 2020

Proposed Regulations Issued on Pooled Plan Provider Registration

The DOL has issued highly-anticipated proposed regulations on registration requirements for entities that will function as "pooled plan providers" for retirement plans that will be known as pooled employer plans, or PEPs.

Source: Futureplan.com, August 2020

Biden Retirement Proposal Would Upend Traditional 401k Plans

A little-noticed feature of Democratic presidential nominee Joe Biden's tax plan would flip the incentive structure of a retirement system grounded for nearly a century on the tax-deductibility of saving. Instead of pretax contributions, everyone would get a flat tax credit.

Source: Rollcall.com, August 2020

iHeart Communications Faces 401k Excessive Fee Suit

A proposed class-action lawsuit has been filed against iHeart Communications, its board of directors and its retirement benefits committee alleging excessive investment and recordkeeping fees for its 401k plan.

Source: Plansponsor.com, August 2020

Parties in Lawsuit Over Revenue Sharing in 401k Plan Agree to Settle

Parties in a lawsuit alleging BTG International and company officials allowed its Profit Sharing 401k Plan recordkeeper to receive excessive and unreasonable compensation through a variety of undisclosed channels have filed a motion for preliminary approval of a settlement agreement.

Source: Plansponsor.com, August 2020

Excessive Fee Suit Parties "Papering Up" Settlement

The parties in an excessive fee suit that had been dismissed by a federal court, have now come to terms. It was only just over a month ago that the suit, filed last fall by Carl Martin against CareerBuilder, claimed that the plan fiduciaries caused the plan to invest millions in imprudent investment options, motivated by revenue sharing payments back to ADP and Morgan Stanley.

Source: Napa-net.org, August 2020

EBSA to Hold (Virtual) Hearing on Fiduciary Rule

The Employee Benefits Security Administration announced that it will hold a public hearing on its new fiduciary rule proposal. The hearing is being held "to consider issues attendant to adopting a proposed prohibited transaction exemption on Improving Investment Advice for Workers and Retirees."

Source: Napa-net.org, August 2020

Massive 401k Suit Settlement Struck

In a remarkably short period, an excessive fee suit involving proprietary funds has settled for what may be the largest monetary settlement among those cases to date.

Source: Napa-net.org, August 2020

A Plan Sponsor's Responsibilities

Congratulations! You have an employee retirement plan in place. Of course, you want to do the right things to run your plan. Here are some tips from the IRS that will help you stay on course.

Source: Irs.gov, August 2020

The SECURE Act's Implications for Guaranteed Income

The SECURE Act includes three sections designed to encourage more employers to adopt retirement plans, and it simplifies a few issues that have bedeviled plan sponsors and taxpayers for years.

Source: Hallbenefitslaw.com, August 2020

SEC Urges Firms to Take Precautions on COVID-19 Retirement Account Distributions

Considering that many firms have modified their normal operating procedures and moved to a company-wide telework environment, the Securities and Exchange Commission is urging firms to take extra steps to ensure the safety of its investors’ assets.

Source: Asppa.org, August 2020

DC Plan Administration: A SECURE and CARES Act Reminder

The SECURE and CARES Acts provide a broad spectrum of required and optional changes that employers must evaluate for retirement plan administration. One impending change is the SECURE Act's broader eligibility requirement for part-time employees in 401k plans, which becomes effective on January 1, 2021. Also, employers may be surprised to learn that some CARES Act distribution options were added to their plans automatically by their record keepers through a default process. Thus, employers should review their plan's administrative procedures to determine if changes under the SECURE Act and CARES Act were implemented to ensure administrative compliance with the plan document.

Source: Spencerfane.com, August 2020*

Defined Contribution Plan Profile: A Close Look at 401k Plans 2017

Employers choose the features to include in their 401k plans. This 88-page study analyzes automatic enrollment, employer contributions, and participant loans outstanding in a sample of more than 60,000 large private-sector 401k plans, typically plans with 100 participants or more in 2017.

Source: Ici.org, August 2020

Research Highlights Three Key Features of 401k Plan Design

The annual collaboration between ICI and retirement plan rating provider BrightScope breaks down the most common elements of employer 401k plans. ICI Senior Director of Retirement and Investment Research Sarah Holden summarizes the latest findings.

Source: Ici.org, August 2020

Revisiting the SECURE Act's Lifetime Income Disclosures

Way back in December of 2019, the SECURE Act was passed into law and made significant changes to retirement benefit plans. It is easy to forget about the SECURE Act after the CARES Act and a seemingly endless flow of administrative guidance that has come out since the national emergency caused by the coronavirus pandemic. But the DOL has brought the SECURE Act back to the main stage after it issued the interim final rule this week on lifetime income illustrations.

Source: Graydon.law, August 2020

The Emerging Patchwork of Fiduciary Investment Advice Regulation

2020 has seen several fiduciary and best interest advice regulations advance at both the federal and state levels. Firms subject to these regulations face challenges in dealing with rules that impose a host of new obligations, and that may overlap and conflict with one another. Eversheds Sutherland developed this chart to help firms take stock of the evolving framework and aid firms in putting the pieces together. This most recent version of the chart is updated to reflect the Labor Department's formal reinstatement and the new interpretation of its 1975 ERISA five-part fiduciary definition.

Source: Eversheds-Sutherland.com, August 2020

Having Both a 401k and an IRA: How Much Does This Change the Retirement Asset Picture?

Oftentimes, reporting on retirement assets focuses on the average balances of either 401k plans or IRAs. While this provides invaluable information on the behavior within those accounts, it does not show a complete picture of the amount of retirement assets workers or retirees have accumulated. This study helps put numbers to what would be expected to be accumulated given these different traits of workers.

Source: Ebri.org, August 2020

Proposed Regulations on Rollover of 401k Qualified Plan Loan Offsets

On August 17, 2020, the IRS issued proposed regulations addressing rollovers of qualified retirement plan (particularly 401k plan) loan offset amounts. The proposed regulations reflect changes to the previous rules regarding rollovers of plan loan offsets made by the Tax Cuts and Jobs Act of 2017.

Source: Compliancedashboard.net, August 2020

Self-Directed 401k Balances Rebound in Q2, Up 13% Quarter-Over-Quarter

According to Charles Schwab's SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts, the average account balance across all participant accounts finished Q2 2020 at $285,616, a 3.3% increase year-over-year and a 13% increase from Q1 2020.

Source: Businesswire.com, August 2020

DOL Issues Interim Final Rule on Lifetime Income Disclosures for DC Plans

The SECURE Act required, for the first time, that administrators of DC plans provide participants with disclosures regarding estimated lifetime income payments. Such estimates are designed to help employees evaluate their ability to retire by giving them an educated estimate of how their savings in the plan might translate into lifetime income payments. The DOL recently announced an interim final rule to implement these provisions of the SECURE Act.

Source: Bradley.com, August 2020

Audit Information Request Template

If you're preparing for your first 401k plan audit, you may be wondering what information the auditor will need for the audit. To help you prepare, this template was created of an audit information request which conveys the overall level of detailed verification required in an audit.

Source: Belfint.com, August 2020

DOL Proposes Registration Requirements for Pooled Plan Providers

The DOL issued proposed regulations that would establish requirements for pooled plan providers to register with the DOL. The DOL says that it recognizes that there may be challenges associated with these new types of multiple employer plans that it, the Treasury Department, or IRS may need to address.

Source: Asppa.org, August 2020

Qualified Plan Loan Offset Rollover Rules Proposed by IRS

The IRS has released a notice of proposed rulemaking that takes into account changes made by the Tax Cuts and Jobs Act concerning rollover rules for qualified plan loan offset amounts.

Source: Ascensus.com, August 2020

Self-Directed 401k Balances Jump in Q2 2020

A 3.3% year-over-year increase and a 13% increase from the end of the first quarter of 2020? Not bad for self-directed 401k balances considering the havoc wrought by the pandemic in the first half of 2020. According to Charles Schwab's latest SDBA Indicators Report, the average account balance across all participant accounts finished Q2 2020 at $285,616, reflecting that 3.3% increase from 2019 and 13% increase from Q1 2020.

Source: 401kspecialistmag.com, August 2020

The Benefit of Saving Regularly for Retirement

Supplement participant conversations about how much to save for retirement with this helpful article regarding the 15% rule of thumb. The article explains how saving at least 15% of gross income (including employer contributions) can allow individuals to save enough for retirement that could last decades. An automated approach to saving regularly ensures it's a priority and helps take the emotion out of investing.

Source: Troweprice.com, August 2020

LinkedIn Joins List of Plan Sponsors Targeted in Stream of Excessive Fee Suits

According to the complaint, the plan has at all times during the class period maintained more than $164 million in assets qualifying it as a large plan in the defined contribution plan marketplace and giving it "substantial bargaining power regarding the fees and expenses that were charged against participants' investments." The plaintiffs allege that the defendants did not try to reduce the plan's expenses or scrutinize each investment option that was offered in the plan to ensure it was prudent.

Source: Plansponsor.com, August 2020

DOL Unveils Lifetime Income Disclosure Rule

In the latest of a series of regulatory announcements, updates, and proposals, the DOL has unveiled an Interim Final Rule on lifetime income disclosures under the SECURE Act. Under the rule, retirement plans would provide lifetime income illustrations using prescribed assumptions designed, the Labor Department notes, "to give savers a realistic illustration of how much monthly retirement income they could expect to purchase with their account balance."

Source: Napa-net.org, August 2020

A Retirement Readiness Checklist

Gauging your financial affairs in advance of retirement is a job that lends itself well to a checklist. If you're starting to think about retirement and what your retirement plan should look like, here's a checklist to help you think through the key variables.

Source: Morningstar.com, August 2020

Keep Reminding Clients About the Importance of Being a Fiduciary

Advisors who are fiduciaries may make this a core part of their sales pitch to a new client. But they shouldn't assume that just because a client has signed on with them, that he or she understands why it matters. If your clients don't truly understand the difference between a fiduciary and nonfiduciary, all your good intentions could turn out to be worthless. An advisor's job of educating clients about the benefits of working with a fiduciary is never done.

Source: Morningstar.com, August 2020

DOL Take Three: Five-Part Test Officially Reinstated; Proposed Investment Advice Exemption

Just as broker-dealers and investment advisers finalized their initial implementation plans for the SEC Form CRS and Regulation Best Interest, the DOL announced a final rule and proposed class exemption as the next step in the now 10-year-long "DOL Fiduciary Rule" saga.

Source: Morganlewis.com, August 2020

401k Fiduciary Litigation on the Rise: Take These Steps Now to Avoid Liability Later

A recent spate of lawsuits against large employers' 401k retirement plans has refocused attention on the need for plan administrators to ensure that they are honoring their fiduciary duties and prudently managing their Plans. Plan administrators should take several steps now to ensure that they have good defenses when lawsuits are filed.

Source: Foley.com, August 2020

American Airlines 401k Plan Not Required to Offer Stable Value Fund

Among the many claims brought by plaintiffs challenging investment offerings in defined contribution plans is the claim that plans should offer stable value funds instead of more conservative capital preservation funds, such as money market funds and deposit accounts that are insured by the U.S. government. Plaintiffs have argued that stable value funds are inherently better than more conservative options because they typically provide a higher rate of return. A federal district court in Texas recently dismissed this type of claim in a case brought against American Airlines.

Source: Erisapracticecenter.com, August 2020

Managed Accounts: A Primer

This 9-page primer is meant to provide an overview of the key aspects of managed account programs today. It includes a review of the basics of managed accounts, a summary of their usage over time, a description of how they can be offered, and considerations for determining if they are right for a particular defined contribution plan, and if so, in what ways.

Source: Dciia.org, August 2020

Fake Fiduciary Rule Comments Spur Senators to Question DOL's Scalia

A trio of Senators recently sent a letter to Secretary of Labor Eugene Scalia pressing him to outline the actions he's taken to prevent another rash of fake comments from appearing as the Department of Labor considers how its new prohibited transaction exemption will align with the SEC's Regulation Best Interest.

Source: 401kspecialistmag.com, August 2020

IRS Issues Updated Safe Harbor Notices for Eligible Rollover Distributions

The IRS has updated its safe harbor explanations for eligible rollover distributions from qualified retirement plans, including 401k plans. IRS code requires retirement plan administrators to provide recipients of eligible rollover distributions with a written explanation of their rollover options and the tax consequences of their distributions within a reasonable time before those distributions are made. To satisfy this requirement, the IRS has provided two safe harbor rollover explanations.

Source: Thomsonreuters.com, August 2020*

Are Employer-Sponsored DC Plans the Best Retirement Savings Vehicles?

Started with the passage of the Revenue Act of 1978, employer-sponsored 401k plans have been celebrated among those in the retirement industry for their tax advantages. But the coronavirus pandemic and other factors have called into question the value of DC plans. Still, experts say they're a good savings vehicles.

Source: Plansponsor.com, August 2020

4th Circuit Ruling Supports ERISA Stock-Drop Plaintiffs

Since an influential Supreme Court ruling known as Dudenhoeffer, plaintiffs have struggled to defeat dismissal motions in so-call stock-drop lawsuits, but a new panel ruling in the 4th Circuit bucks that trend.

Source: Planadviser.com, August 2020

Checklist for Amending a 403b Plan

This is a checklist for amending a 403b plan for a public educational institution. The general steps to amend a 403b plan are reviewed.

Source: Ntsa-net.org, August 2020

Top 10 Hidden Liability Pitfalls That Retirement Plan Sponsors Should Avoid

Retirement plan fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These responsibilities include: acting solely in the interest of plan participants and with the exclusive purpose of providing benefits to them; carrying out their duties prudently; following the plan documents; diversifying plan investments; and paying only reasonable plan expenses. This article details pitfalls that plan fiduciaries are usually unaware of, which could expose them to potential fiduciary liability.

Source: Jdsupra.com, August 2020

McKinsey Settles 401k Suit for $39.5 Million

McKinsey & Co. is shelling out $39.5 million to put a class-action lawsuit over its retirement plans behind it, according to court records filed this week. Huntington Bancshares also settles a retirement plan lawsuit, while American Airlines sees a surprise win.

Source: Investmentnews.com (registration may be required), August 2020

Workers Need More Help With Retirement Plans: Report

401k plan providers have improved service overall this year, but not when it comes to communicating about COVID-19, according to Cogent. Plan participants have a lot of questions about how to respond to the COVID-19 crisis, and they haven't necessarily gotten answers from retirement plan providers and advisers.

Source: Investmentnews.com (registration may be required), August 2020

Pandemic Behind 401k Sales Slump, Client Retention Bump

Changing retirement plan providers was not a top priority for employers during the second quarter, which didn't help recordkeepers win much new business. A survey of 14 recordkeepers published last month by Limra's Secure Retirement Institute found that sales were down by 21% compared with the second quarter of 2019.

Source: Investmentnews.com (registration may be required), August 2020

IRS Provides Guidance on 2020 Waiver of Retirement Plan Required Minimum Distributions

In June 2020, the IRS issued Notice 2020-51 giving guidance on how to interpret and administer the 2020 RMD waiver provisions in the CARES Act and the required beginning date provision in the SECURE Act. Here are highlights of this recent IRS Notice.

Source: Frostbrowntodd.com, August 2020

Estee Lauder and Costco Targeted in 401k Lawsuit Surge

Lawsuits involving 401k plans with more than $1 billion have been filed against large corporations in the past couple of months, all centered around regulatory violations and the general mismanagement of 401k retirement accounts. Estee Lauder and Costco are now among a growing number of companies facing overwhelming backlash from employees, consumers, and lawmakers for these alleged offenses.

Source: Forbes.com, August 2020

Participant Engagement: Determining Your Audience's Preferences

One of the challenges associated with successfully engaging retirement plan participants is figuring out your audience's preferences. Understanding a participant's behavior is the key to successful engagement. Here are some of my behaviors that are relevant to the engagement process.

Source: Cammackretirement.com, August 2020

Addressing Retirement Plan Loan Defaults: A Recommended Path and Concerns About Another Approach

The American Benefits Council has been supportive of the critical retirement savings relief provided by Congress, the Treasury Department, the Internal Revenue Service, the U.S. Department of Labor, and the Pension Benefit Guaranty Corporation during this coronavirus crisis. This 2-page brief addresses policy inquiries regarding the possibility of further relief related to retirement plan loans.

Source: Americanbenefitscouncil.org, August 2020

Breaking Bad Behavior: Americans Leave Retirement Savings Alone

A bit of good behavioral news from Empower Retirement. The recordkeeping giant's Empower Institute finds that Americans are determined to keep their hands off their retirement savings even when faced with financial difficulties brought on by the worldwide pandemic. A survey reports that 401k participants and those with similar workplace plans would rather cut back on spending or dip into their savings accounts before touching their retirement savings.

Source: 401kspecialistmag.com, August 2020

4th Circuit Revives Lawsuit Over 'Imprudent' Gannett 401k Plan

A federal appeals court has revived a proposed class-action lawsuit accusing Gannett Co Inc of imprudently maintaining a risky single-stock fund in its employees' 401k plan, resulting in tens of millions of dollars in losses.

Source: Reuters.com, August 2020

Mercy Health Corp. Faces 403b Plan Excessive Fee Lawsuit

An ERISA lawsuit has been filed against fiduciaries of Mercy Health Corp.'s 403b plan. Among other things, the lawsuit alleges the health care system unreasonably maintained investment advisers and consultants despite the known availability of others with lower costs and/or better performance histories.

Source: Plansponsor.com, August 2020

Judge Finds 401k Participants Proved No Harm From Lack of Stable Value Fund

A more than four-years-long lawsuit arguing American Airlines should have offered a stable value fund in its 401k plan rather than the AA Credit Union Fund has ended with a federal judge granting summary judgment to American Airlines.

Source: Planadviser.com, August 2020

Do 401k Menus Suffer From a Generation Gap?

A new whitepaper finds that the use of fixed income options in 401k plans has not kept pace with workplace trends. The whitepaper points out that in the past, investment recommendations may have been more focused on achieving minimum compliance and "checking the fixed income box" rather than anticipating participant investment needs at various life stages. A multi-generational participant population has more complex needs.

Source: Napa-net.org, August 2020

Illinois Federal Court Dismisses ERISA Claims Against 401k Fiduciaries

ERISA requires plan fiduciaries to act prudently and loyally when making decisions about a plan. In Martin v CareerBuilder, LLC, a federal district court held that the plaintiff's allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants had violated their ERISA obligations.

Source: Internationallawoffice.com, August 2020

Canadian Pension Plans Outperform Their Global Peers: Study

While Canadian pension plans hold quiet confidence, it turns out they do outperform their international peers when it comes to asset performance and liability hedging, according to a research paper from McGill University and CEM Benchmarking.

Source: Benefitscanada.com, August 2020

IRS Provides Updated Model 402(f) Notices

The IRS released Notice 2020-62 providing updated safe harbor explanations for rollover distributions to accommodate changes made under the SECURE Act. Specifically, the new 402(f) Notices -- one for distributions from a non-designated Roth account and one for distributions from a designated Roth account -- update the two safe harbor explanations provided by the IRS in 2018, as outlined in IRS Notice 2018-74, to reflect the changes reviewed here.

Source: Amazonaws.com, August 2020

Media Company Latest to Face Legal Scrutiny Over Fidelity Freedom Funds

A new ERISA lawsuit has been filed in the U.S. District Court for the Southern District of New York, naming as defendants the Omnicom Group and various individuals and committees who are alleged to be fiduciaries of the media company's retirement plan. The plaintiffs say these fiduciaries breached the duties of prudence and loyalty demanded by ERISA in their management and oversight of the plan's investment menu.

Source: Planadviser.com, August 2020

If it Ain't Broke, Fix it as Needed: The DOL's Revised Fiduciary Rule

In this Bloomberg Tax article, Groom associate Anthony Onuoha first discusses the historical timeline that provided the impetus for the Proposed Class Exemption. Then, he provides a broad overview of the Proposed Class Exemption along with key takeaways.

Source: Groom.com, August 2020

IRS Lends a Hand on 402(f) Notices

This week, the IRS has released updated safe harbor 402(f) notices to reflect the recent legislative change made, including changes in law made by the SECURE Act. These changes include qualified birth and adoption distributions and the change from age 70 1/2 to 72 for RMDs.

Source: Graydon.law, August 2020

Not "Wired at Work"? New DOL E-Disclosure Rule is Here to Help

The DOL announced final regulations that describe new "safe harbor" procedures for electronic delivery of required ERISA retirement plan disclosures such as Summary Plan Descriptions, quarterly or annual account statements, and other items. The new safe harbor procedures are an addition to the DOL e-disclosure rules that date back to 2002 and represent an improvement on the 2002 rules for employees who are not "wired at work," as defined in those regulations. The safe harbor procedures took effect on July 27, 2020. A plan administrator that relied on the safe harbor before that date wouldn't be subject to enforcement action, the DOL vowed.

Source: Eforerisa.wordpress.com, August 2020

IRS Updates 401k Model Rollover Notice

The IRS issued Notice 2020-62 which updates the information that must be provided to participants in retirement plans (including 401k plans) when they become eligible for a distribution. Also, Notice 2020-62 provides two model rollover notices (one solely for payments from Roth contribution accounts, and another for payments from traditional, non-Roth accounts) which, if used for this purpose, are deemed to satisfy the statutory requirement.

Source: Compliancedashboard.net, August 2020

Evidence Emerges of COVID-19's Impact on Forced Retirement

Unplanned retirement in the current crisis is higher than during the Great Recession, with women and people of color disproportionately affected, a report finds. Nearly 5 million people ages 55 to 70 have lost their jobs since March, and many of them are unlikely to return to the workforce, according to a report this week from The New School's Retirement Equity Lab.

Source: Investmentnews.com (registration may be required), August 2020*

Retirement Plans and Coronavirus: Take Steps to Protect Your Employees

Employers know their employees are stressed and worried about their retirement planning in the wake of the Coronavirus pandemic. The good news is there are steps you can take to help your employees and your business at the same time. Here's how.

Source: Hubinternational.com, August 2020

IRS Issues Safe Harbor Explanations for Eligible Rollover Distributions

The IRS on Aug. 6 in Notice 2020-62 issued safe harbor explanations for eligible rollover distributions. The notice modifies the two model notices in Notice 2018-74. Those safe harbor explanations reflect relevant law as of Sept. 19, 2018: one safe harbor is for payments not from a designated Roth account, and the other is for payments from a designated Roth account.

Source: Asppa.org, August 2020

Maine Bill Would Create Public-Private Partnership to Increase Retirement Saving

A bill pending in the Maine legislature would create a public-private partnership to promote individual retirement savings accounts. Even those with differing views on the measure roughly agreed in their testimony to the committee regarding what the bill would require.

Source: Asppa.org, August 2020

Proposes ESG Rule Tells Plan Fiduciaries to Stay in Their Lane

The DOL has proposed a rule intended to "provide clear regulatory guideposts for plan fiduciaries in light of recent trends involving environmental, social and governance (ESG) investing." The new rule codifies the Department's existing position that plan fiduciaries must select investments based on financial considerations, not on non-pecuniary objectives.

Source: Velaw.com, August 2020

What Employers Should Know About the DOL Final Rule for Electronic Disclosure

On May 27, 2020, the DOL issued a final rule that makes it easier for employers to provide required disclosures to retirement plan participants and beneficiaries. The final rule provides two additional safe harbors for the production of retirement plan disclosures via electronic media: the "Notice and Access" safe harbor and the "Direct Delivery Via Email" safe harbor. Here are the key points that employers should know about the new safe harbors.

Source: Thompsoncoburn.com, August 2020

DOL Motives for Fiduciary Rule Questioned in Public Comments

Much of the financial services industry's commentary about the proposal has been positive, with various commenters voicing appreciation that multiple national-level conflicts of interest rules are now aligned. Not everyone is pleased with the DOL's proposal, however. Consumer groups and advocates of the fiduciary adviser industry want the Department of Labor to reconsider aspects of its proposed fiduciary rule.

Source: Planadviser.com, August 2020

Overview of the DOL's New Fiduciary Rules for Retirement Plan Investment Advice

The DOL released final regulations that reinstate its definition of who is a fiduciary because of providing investment advice to Retirement Plans, which reflect a "5-Part Test" that had been in effect from 1975 until its modification by the 2016 Fiduciary Rule. The final regulation adds several new interpretations and clarifications to the longstanding 5-Part Test. The DOL's new approach has no impact on existing standards for financial institutions or investment professionals with discretionary authority over Retirement Plans.

Source: Kilpatricktownsend.com, August 2020

Key Concepts You Should Be Aware of as a 401k Plan Sponsor

Times change and seasons change. Yet, some things remain the same. When it comes to sponsoring a 401k plan, some key concepts never change, whether there is a global pandemic going on or not. This article is about the key concepts that 401k plan sponsors need to understand.

Source: Jdsupra.com, August 2020

Review Investment Policy Statements for ESG Investment Compliance

As the DOL increases its investigations and inquiries into ESG investments held by retirement plans, plan fiduciaries should review their plan investments and policies to (i) determine if their retirement plans hold any ESG-type investments, and (ii) if they do hold such investments, (a) review their investment policy statements and evaluate whether such policies comply with the current rules for ESG investments, and (b) confirm whether such investments remain appropriate for the plan.

Source: Haynesboone.com, August 2020

Avoiding COVID-19 Benefits-Related Litigation

The COVID-19 pandemic has brought about a staggering number of changes for employers in the past few months, requiring them to make significant changes to workplace processes and policies virtually on the fly. In this environment, it's important to review employee benefits plans to ensure these changes have not triggered any adverse consequences.

Source: Hallbenefitslaw.com, August 2020

Know Your Rights Under ERISA to Prevent Pension Fraud

Although the defined benefit plan may be falling by the wayside, many believe that pensions are still a hotbed for fraud. This belief is due in large part to the general nature of a pension and the large amounts of money accumulated over time that is inaccessible to the intended recipient until some future point in time. Under ERISA, employers and fund managers can be held liable for damages sustained when employees are defrauded of their pension assets.

Source: Eisneramper.com, August 2020

DOL's New Rules Don't Have to Slow DC Plan ESG Adoption

Demand for ESG investing is growing among DC plan participants, but with plan sponsors facing many choices and proposed new DOL rules, what’s the best approach? Two in three sponsors feel that integrating ESG factors into their investment approach is a fiduciary duty. But about four in 10 say their biggest obstacle is understanding the many ways to offer ESG.

Source: Alliancebernstein.com, August 2020

How to Pick the Best Small Business 401k Plan Provider

To attract and keep talented employees, it can be a smart move to add a 401k plan to your small business. As a result of the SECURE Act, which was passed in 2019, there are now more opportunities for small employers to offer retirement plans. The law allows small businesses to participate in pooled employer plans, making it easier and less costly for small employers to provide workers with a retirement plan. Here's how to select the right 401k plan provider for your small business.

Source: Usnews.com, August 2020

DOL's ESG Proposal Blasted by Commenters

The DOL's proposed rule addressing environmental, social, and governance factors in selecting plan investments received more than 1,500 comment letters during the 30-day comment window, with many taking issue with the proposal.

Source: Napa-net.org, August 2020

SEP, MEP, or PEP: Identifying The Key Differences in Retirement Plans

This 24-page white paper explains the differences between single-employer, multiple-employer, and pooled-employer plans, as well as other group programs for offering retirement benefits.

Source: Ferenczylaw.com, August 2020

Federal Court Dismisses ERISA Claims Against 401k Fiduciaries

ERISA requires plan fiduciaries to act prudently and loyally when making decisions about the plan. In Martin v. CareerBuilder, a federal district court held that the complaint's allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants violated their ERISA obligations.

Source: Employeebenefitsblog.com, August 2020

No "Earth-Shattering" Retirement Proposals in Biden Platform

Presumptive Democratic presidential nominee Joe Biden has issued his plan for helping American seniors retire more successfully, dubbed "The Biden Plan for Older Americans." The platform promises to reinforce Social Security and Medicare, though it lacks major economic policy reforms of the type preferred by more progressive Democrats.

Source: Plansponsor.com, August 2020

The Latest on Participant Behavior During the Pandemic

While various shifts were seen in savings plan contributions and withdrawals in the first few months of the outbreak, there have been some improvements as of late, according to data from Ascensus. In the first few months of the COVID outbreak, the firm reported on a relatively small percentage of retirement plans that had stopped making contributions altogether due to business interruptions. But on a more positive note, as of the end of June, most of these plans have shown encouraging signs of recovery and are taking steps to return to pre-pandemic levels of savings plan contributions.

Source: Napa-net.org, August 2020

Participants Looking for "Extreme" Automatic 401k Plans; Survey

Believing their workplace retirement savings plan is one of the most important benefits their employer offers, a large majority of employees support employer efforts to implement automatic plan features. According to the survey by American Century Investments, some 7 in 10 respondents believe automatic enrollment should be implemented at a 6% contribution rate, and two out of three believe their employer should automatically enroll employees into their plan at a set percent and increase it automatically each year.

Source: Napa-net.org, August 2020

Safe Harbor 401k 2020 Establishment Deadline

As you might expect, preparation and planning are always necessary to establish a new tax-qualified plan or redesign an existing one. The same holds for a Safe Harbor Plan. Therefore, even with the new Safe Harbor Plan establishment timing flexibility under the SECURE Act, now is the time to begin to consider whether a safe harbor feature is right for your company or your client's plan to ensure that it can be fully operational in advance of the applicable deadline.

Source: Legacyrsllc.com, August 2020

DOL Reinstates Five-Part Test for Fiduciary Investment Advice

The DOL has proposed a new prohibited transaction exemption from the rules of ERISA and the Internal Revenue Code that would allow qualifying investment advice fiduciaries to receive what would otherwise be prohibited compensation. These rules are important for plan administrative, investment, and other service providers to 401k and other retirement plans. In general, employers are typically not the fiduciary involved in a potential prohibited transaction related to investment advice, but employers should always be alert to services being marketed by plan vendors by reviewing the information provided to participants related to plan distributions and IRA rollovers.

Source: Frostbrowntodd.com, August 2020

401k Survey Finds Savings Goals and Stress Levels on the Rise

Anxiety about long-term retirement savings is up according to a new survey from Schwab Retirement Plan Services, and so is participant engagement. The nationwide survey of 1,000 currently employed 401k plan participants finds that saving enough for a comfortable retirement continues to be their leading source of significant financial stress. Two in five participants also say they made a change to their 401k account due to COVID-19, citing rebalancing and increasing contribution rates as the most common changes.

Source: Businesswire.com, August 2020

Are There Partial Terminations of 403b Plans?

The "partial termination" rules are pretty straightforward, and TPAs and recordkeepers all know where to draw the line and provide guidance to their clients. Or so you would think. But the 403b termination vesting rules are vastly different than those for 401k plans. You'll find that there just aren't any in the Tax Code, ERISA, or Tax regulations.

Source: Businessofbenefits.com, August 2020

Participants Talk Saving, Retirement Plans and Risk; Research

Plan Sponsors and their advisors consider many factors when evaluating and defining retirement plan design. One of those should be understanding participant sentiments about saving and retirement benefits. Use findings from our 8th national survey to add insight and value in your discussions and deliberations about participant behaviors and plan features.

Source: Americancentury.com, August 2020

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