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August 2021 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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Judge Dismisses Kraft Heinz Stock-Drop Lawsuit

A federal judge in Chicago dismissed a stock-drop lawsuit against fiduciaries of Kraft Heinz Food Co.'s defined contribution plans by participants who claimed defendants should have acted to protect participants' investments by disclosing unfavorable financial information. The complaint "is fuzzy on exactly what plaintiffs believe defendants should have disclosed and when," U.S. District Court Judge Robert M. Dow Jr. wrote on Aug. 23.

Source: Pionline.com, August 2021

IRS Snapshots Show Continued Focus on 403b Plan Compliance

Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers.

Source: Mercer.com, August 2021

How Universal Access and a Refundable Saver's Tax Credit Can Transform Retirement Savings

Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers.

Source: Georgetown.edu, August 2021

Supercharge Your Employee Retirement Plan

Upcoming required retirement plan restatements represent a golden opportunity for plan sponsors to enhance current plan design and audit administrative procedures. This article explains more.

Source: Francisinvco.com, August 2021

Does Cryptocurrency Check the Right Boxes for Your 401k?

A recent innovation allows businesses to include access to digital currencies in their 401k, but how do you know if it's the right thing to do? Those already investing in cryptocurrency may grasp the potential for tax savings by doing it in a 401k, but many plan sponsors are asking themselves if it makes sense. Here are five key questions to ask when considering cryptocurrency in your 401k.

Source: Forusall.com, August 2021

What Does a 401k Audit Encompass?

The determining factor for whether your 401k plan needs an audit depends on the number of participants in the plan on the first day of the plan year. If it is determined by the administrator that the plan requires an audit, there are two types that the administrator can instruct the auditor to perform. Within both types of 401k plan audits, there are several high-level areas of the plan that an auditor will test.

Source: Eisneramper.com, August 2021

Self-Directed 401k Balances Increase 22% Year-Over-Year

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 2021 at $348,183, a nearly 22% increase year-over-year and a 4.3% increase from Q1 2021.

Source: Businesswire.com, August 2021

The 403b Qualified Plan Distribution Annuity Contract Under SECURE Section 109

You may have noticed that the SECURE Act introduced yet another new twist to the 403b world: the Qualified Plan Distribution Annuity Contract. It's not that Congress was singling out 403b plans, as 401(a) and 457(b) plans can now distribute the QPDAC. But, as in all other things 403bs, there are several unique twists to the rules which exist solely in the 403b world.

Source: Businessofbenefits.com, August 2021

Employers Can Help Close Racial And Ethnic Retirement Savings Gaps With Financial Wellness

Research from T. Rowe Price found that Black and Latinx 401k savings rates are lower compared to their white counterparts. The median deferral rates were 5% and 8% for Black and Latinx participants, respectively, compared to 9% for white participants. Additionally, Black and Latinx respondents were more likely to cite having a student loan, medical, and other types of debt, further impairing their ability to save for retirement. DC plans, such as 401ks, are one of the few places where access to financial advice, guidance, and education in support of lifetime financial goals is supported equally. This provides plan sponsors with a unique opportunity to directly address plan participation and savings gaps through the availability of financial wellness tools and services and better plan design.

Source: Prnewswire.com, August 2021*

Essentials to Limit Loans and Hardship Withdrawals

Though research from Vanguard determined that retirement plan loan and hardship withdrawal activity decreased in 2020, experts say employers should consider enacting procedures to limit retirement plan distributions while still offering help to their participants in emergencies. Plan sponsors should educate their employees about distributions, and they can help their workers set up emergency savings accounts to avoid tapping into retirement funds.

Source: Plansponsor.com, August 2021

Participants Prefer Socially Responsible Funds Over Traditional Investments

A recent Morningstar study found participants may be willing to trade in return gains for the opportunity to invest in socially responsible funds. The report found that although survey participants strongly favored funds with high five-year returns, they preferred funds or asset managers with both strong financial metrics and high diversity, equity and inclusion, or gender equality scores.

Source: Plansponsor.com, August 2021

GAO Finds Most Participants Stumble Over Fee Disclosures

The DOL has required defined contribution plans to provide participants with information on plan and investment fees. During a 2010 news conference, then-Assistant Secretary of Labor of the DOL's Employee Benefits Security Administration Phyllis Borzi said fee disclosure rules are designed to "make sure everyone knows what they are paying for and how this affects plan balances." However, a recent Government Accountability Office study found this has not always been the case.

Source: Planadviser.com, August 2021

Rising 401k Contribution Rates, Fewer Plan Loans, Show a Return to Normal

The average annual 401k savings rate for plan participants reached a new high of 9.3 percent of workers' earnings this year, according to new research. Fidelity's analysis, released in August and based on 23,600 Fidelity-administered corporate defined contribution plans as of June 30, 2021, showed workers starting to feel more stability and a sense of normalcy, compared with the results of participant surveys Fidelity conducted last year.

Source: Shrm.org, August 2021

40% of 401k Participants Say Fees a Mystery, GAO Reports

Almost 40% of 401k plan participants do not fully understand the fees they are paying, a Government Accountability Office report released Thursday found. Moreover, 41% of participants incorrectly believe that they do not pay any 401k plan fees, according to the report.

Source: Pionline.com, August 2021

Best Practices for ERISA Fiduciary Responsibilities and Cybersecurity for Retirement Plans

In today's world, most transactions involving retirement plans are conducted electronically, including maintaining and sharing data across multiple platforms. Data and personally identifiable information have become increasingly vulnerable to attack as the information travels across employer and third-party systems. Plan fiduciaries must develop best practices related to cybersecurity. This requires thought and insight and depends on the facts and circumstances. This 12-page paper is an in-depth review of the issue.

Source: Mintz.com, August 2021

Whitepaper: Portfolio Allocation, Income and Spending in Retirement

How do people manage their income and spending in retirement? How do they adjust their asset allocation as they transition into retirement? Certainly, there is survey data on the subject and much-informed speculation. Yet the full picture -- based on empirical evidence that shows how people actually behave -- has remained elusive. No longer. Drawing on an Employee Benefit Research Institute database of more than 23 million 401k and IRA accounts, and JPMorgan Chase data for around 62 million households, authors studied 31,000 people as they approached and entered retirement between 2013 and 2018.

Source: Jpmorgan.com, August 2021

DOL Ramps Up Retirement Plan Cybersecurity Policy Investigations

Reports continue to come in concerning an increasing number of DOL requests made to plan sponsors asking for all cybersecurity and information security program policies, procedures, and guidelines that relate to retirement plans, whether applied by the plan sponsor or by a provider, as well as detailed documentation of specific actions taken by the plan's fiduciaries and providers, including many that the DOL addressed in its guidance.

Source: Hallbenefitslaw.com, August 2021

Retirement Plan Census Data: It's Foundational and Fundamental

Sharing census information at the close of each plan year allows TPAs to proactively administer a retirement plan, find potential issues and maintain a plan's tax-qualified status. The accuracy and completeness of a plan's census data helps in compliance testing, making census data the most important aspect of a retirement plan.

Source: Definiti.com, August 2021

OregonSaves Can Entail Costs to Employers, Study Finds

One of the selling points of OregonSaves, the state-run retirement program for employees whose employers do not offer one, is that it spares employers the administrative complexities and costs of running a plan. A recent study found that's true for most participating employers, but that OregonSaves does entail costs for some employers.

Source: Asppa.org, August 2021

Most Retirees Wait Until RMDs to Tap Retirement Accounts

When it comes to how people manage their income and spending in retirement, it appears we've got a bunch of rule-followers. A new research paper from J.P. Morgan Asset Management shows most people aren't tapping their retirement accounts before their required withdrawals, and even then, they're only withdrawing the minimum.

Source: 401kspecialistmag.com, August 2021

Retirement Plan Sponsors Have Ultimate Responsibility for Operational Compliance

Two law firms have issued reminders that plan sponsors are ultimately liable for any plan operational errors, even if they rely heavily on recordkeepers and third-party administrators for day-to-day plan administration. Indemnification clauses in service provider contracts, PEPs, and 3(16) administrators can reduce plan sponsors' fiduciary burden, but none offer complete protection, attorneys say.

Source: Plansponsor.com, August 2021

Developing a Prudent Process for Cybersecurity

Principals with Groom Law Group discuss steps retirement plan sponsors can take to avoid or be prepared for a DOL cybersecurity audit.

Source: Plansponsor.com, August 2021

2021 PLANSPONSOR 403b Market Survey

403b plans are in many ways the same as traditional corporate 401k plans, but they also have many unique challenges. The PLANSPONSOR 403b Market Survey covers the providers who serve this market, what they focus on in terms of market segment, and the services they provide to 403b plan sponsors.

Source: Plansponsor.com, August 2021

Here's How to Spur More DC Plan Participant Logins

Last year, the DOL established an e-delivery rule allowing plan sponsors to communicate retirement plan information electronically. But is there more that can be done to get participants to log in more often? A recent Cogent Syndicated study from Escalent provides some answers.

Source: Ntsa-net.org, August 2021

Employee Financial Stress Costs Companies Nearly $5B a Week

While employees struggled with their finances during the COVID-19 pandemic, a recent survey finds that the financial impact on organizations is even greater. According to results from BrightPlan's annual Wellness Barometer Survey, financially stressed employees reported an average of 15.3 hours of reduced productivity and engagement each week, leading to an estimated $4.7 billion loss per week for employers due to worsening employee financial health.

Source: Napa-net.org, August 2021

U.S. Chamber Weighs in (Again) on Excessive Fee Suit Surge

Noting that "converting subpar allegations into settlements has proven a lucrative endeavor -- mostly for the lawyers bringing these lawsuits," the U.S. Chamber of Commerce has weighed in on the surge in retirement plan fee litigation. That was just one of the ways the Chamber (and its legal counsel in the matter, Goodwin Proctor LLP) characterized the plethora of lawsuits involving retirement plans.

Source: Napa-net.org, August 2021

How 401k Recordkeepers Not Part of the 'Fab Five' Can Survive

Amid the massive consolidation among 401k providers, the top five recordkeepers have distanced themselves from the pack. The Fab Five either have or are developing proprietary products and the ability to market other financial services to participants. The question that many are asking is, "Can any of the others compete, or even survive?"

Source: Investmentnews.com (registration may be required), August 2021

Suit Over Recordkeeping Fees for PNC Financial's Retirement Plan Dismissed

A federal court has dismissed a lawsuit alleging PNC Financial Services Group and its Incentive Savings Plan administrative committee violated their duties of prudence and loyalty by causing the plan to pay excessive administrative and recordkeeping fees. The court found that the plaintiffs did not state a plausible claim for breach of fiduciary duties. They have already filed an amended complaint.

Source: Planadviser.com, August 2021

How the Use of Fear May Improve 401k Participant Engagement

While providing communications on retirement readiness can significantly improve participant engagement, the use of fear as a behavioral tool may be a better way to rouse unengaged participants.

Source: Napa-net.org, August 2021

Best Practices for ERISA Fiduciary Responsibilities and Cybersecurity for Retirement Plans

Mintz Of Counsel Michelle Capezza authored this Thomson Reuters Practical Law Employee Benefits & Executive Compensation Practice Note discussing cybersecurity best practices for retirement plans to address fiduciaries responsibilities imposed by ERISA.

Source: Mintz.com, August 2021

Step Aside 3(16): The 402(a) Fiduciary Is the New Flavor of the Week

In the color-by-numbers world of retirement plan fiduciaries, the 3(21) was the first one on the block, followed quickly by the 3(38). Then came the 3(16), widely sold as the silver bullet that would protect plan sponsors from the liabilities lurking around every corner. Now, the 402(a) fiduciary is ready to kick all of them to the curb...if you believe the sales hype, that is.

Source: Dwc401k.com, August 2021

Are You Setting Up Your Employees for a Successful Retirement?

As an employer, you want to help your employees reach their goals and build a secure, comfortable future for themselves. And in a time when economic and financial anxiety feel more present than ever before, they need your help even more. While the pandemic has brought about significant changes in our professional and personal lives, there are some vital truths to long-term retirement planning that we must reinforce.

Source: Conradsiegel.com, August 2021

Why the Self-Employed Should Consider a Solo 401k

Self-employed individuals have multiple options to save for retirement and invest in a tax-efficient manner. One of those options, the Solo 401k, can be particularly attractive to entrepreneurs running their own business, including those with both a 9-to-5 corporate employer and a "side-hustle" that earns them additional income.

Source: Wealthspire.com, August 2021

Will 2022 Retirement Plan Limits Soar?

The short answer is yes. Almost every key Internal Revenue Code limit for qualified retirement plans will increase significantly in 2022, Mercer projects. The 2022 limits will reflect increases in the Consumer Price Index for All Urban Consumers from the third quarter of 2020 to the third quarter of 2021. Using this measure, inflation will likely reach its highest level since 2008 -- possibly since 1990 -- and cause some limits to rise by the equivalent of up to three years' worth of ordinary increases.

Source: Mercer.com, August 2021*

Cryptocurrency Funds Are Too Risky for 401k Plan

Should the next change to your 401k plan be the addition of a cryptocurrency fund? A few recordkeepers have made it possible to offer a cryptocurrency fund in 401k plans. Here's why the author thinks adding a cryptocurrency fund is a bad idea.

Source: Lawtonrpc.com, August 2021

401k Plan Sponsors Need to Sweat the Small Stuff

So many people spend so much of their life energy "sweating the small stuff that they completely lose touch with the magic and beauty of life." That is a quote by Dr. Richard Carlson, the author of "Don't Sweat the Small Stuff...and it's all Small Stuff." Dr. Carlson probably was never a 401k plan sponsor because plan sponsors have to sweat the small stuff. This article is all about identifying the small stuff that plan sponsors like you need to identify and be concerned about.

Source: Jdsupra.com, August 2021

Supreme Court to Weigh in on Retirement Plan Fiduciary Duty to Manage Plan Fees

This paper provides background on ERISA's requirements for retirement plans and plan fiduciaries, discusses the issues before the Supreme Court in Hughes v. Northwestern University, and concludes with select legal considerations for Congress.

Source: Congress.gov, August 2021

Are You Ready to Comply With the New Lifetime Income Disclosure Requirement for Benefit Statements?

The Setting Every Community Up for Retirement Enhancement Act of 2019, enacted December 20, 2019, added a new annual disclosure requirement for benefit statements to participants and beneficiaries. The new disclosure requirement applies to all ERISA-covered defined contribution plans (e.g., 401k and 403b plans), regardless of whether annuities are offered under the plan. With the effective date fast approaching, there has been some confusion as to when the lifetime income disclosure must first appear on benefit statements.

Source: Verrill-law.com, August 2021

How DOL's Cybersecurity Guidance Impacts Retirement and Health/Welfare Plans

The DOL issued cybersecurity guidance to plan fiduciaries and participants in the form of three separate documents. The first two documents included what amounted to checklists of provisions that plan sponsors should look for in their contracts with service providers such as third-party administrators, trustees, custodians, investment managers, and the like. The third document was directed more toward individuals. This article reviews steps a prudent fiduciary should consider.

Source: Quarles.com, August 2021

Juniper Networks Is Latest ERISA Lawsuit Target

The claims included in the complaint, which in some respects directly contradict arguments made by other plaintiffs in related fiduciary breach cases, underscore just how many potential avenues for scrutiny plan sponsors face.

Source: Planadviser.com, August 2021

Complex Ruling Issued in Valeant Pharma-Linked ERISA Suit

The U.S. District Court for the Southern District of New York has filed a ruling in a complex ERISA fiduciary breach lawsuit. The plaintiffs are employees and retirement plan participants at DST Systems who argue the defendants pursued "an exceptionally imprudent investment strategy" concerning a significant portion of their retirement assets.

Source: Planadviser.com, August 2021

Baptist Health South Florida Faces ERISA Excessive Fee Suit

The claims are typical of excessive fee suits, but the plaintiffs also cite language from the 403b plan's investment policy statement and say plan fiduciaries didn't follow it.

Source: Planadviser.com, August 2021

Average 401k Is 24% Bigger Than a Year Ago: Fidelity

Higher contribution rates and market returns pushed up retirement savings considerably, a report from Fidelity found.

Source: Investmentnews.com (registration may be required), August 2021

Cyber Insurance for 401ks Rises in Cost, Demand

Coverage is now harder to get, and it costs more, largely due to the higher volume of attacks that resulted in higher loss ratios for insurers.

Source: Investmentnews.com (registration may be required), August 2021

DOL Initiates Cybersecurity Retirement Plan Audit Initiatives

The DOL recently released its first-ever guidance on cybersecurity for retirement plans. Just a few months after issuing this guidance, reports are coming in that the DOL has issued information and document requests to plan sponsors that are "probing and indicate serious inquiry by the DOL." These requests are asking for all cybersecurity and information security program policies, procedures, and guidelines that relate to retirement plans, whether applied by the plan sponsor or by a provider, as well as detailed documentation of specific actions taken by the plan's fiduciaries and providers, including many that the DOL addressed in its guidance.

Source: Hallbenefitslaw.com, August 2021

The Pleading Standard for Excessive Fee Lawsuits: An In-Depth Analysis of the Northwestern Excessive Fee Case

Euclid's new whitepaper analyzes how the Supreme Court should review the Hughes v. Northwestern excessive fee lawsuit in the upcoming Fall term, by establishing a more consistent and rigorous standard to weed out speculative and unsubstantiated claims that the retirement fees for many of America's largest defined contribution plans are too high.

Source: Euclidspecialty.com, August 2021

Service Provider Fee Disclosures: Understanding the Process

The DOL regulations regarding service provider fee disclosures clarify that plan fiduciaries are responsible for assessing the reasonableness of fees charged to plans in relation to services performed. Before a plan fiduciary is able to assess the reasonableness of plan fees, the fiduciary has to receive required fee disclosures from their covered service provider. A covered service provider is considered a party that enters into an agreement with a retirement plan to provide certain services.

Source: Berrydunn.com, August 2021

Suite of Bipartisan Retirement Savings Bills Reintroduced

Sens. Todd Young and Cory Booker have reintroduced several bills to help boost retirement security for individuals and families. Citing data by the DOL showing that more than 40 million people do not have access to any workplace retirement plan, the pair introduced four bills Aug. 4 that, among other things, would expand automatic enrollment in retirement plans, as well as make it easier for individuals to build emergency savings.

Source: Asppa.org, August 2021

Major Increases Forecast for 2022 Contribution and Benefit Limits

Using the Internal Revenue Code's cost-of-living adjustment and rounding methods, the Consumer Price Index for All Urban Consumers through July, and estimated CPI-U values for August and September, benefits consultant Mercer has projected that the contribution limits for 401k, 403b and eligible 457 plan elective deferrals (and designated Roth contributions) will increase from $19,500 at present to $20,500 in 2022.

Source: Asppa.org, August 2021

Xerox Hit With ERISA Suit Alleging Excessive Fees

Participants of the Xerox Corp. 401k Savings Plan have filed an ERISA lawsuit against Xerox Corp., its plan administration committee, and various individual defendants alleging imprudent recordkeeping fees. The complaint claims participants overpaid millions of dollars to Xerox's recordkeeper from 2015 through 2021.

Source: Planadviser.com, August 2021

Managed Accounts the Focus of 401k Excessive Fee Suit

The fiduciaries of another billion-dollar 401k plan have found themselves in the cross-hairs of an excessive fee suit and the fees for the managed accounts have been called out for special scrutiny.

Source: Napa-net.org, August 2021

You Need to Be Organized As a 401k Plan Sponsor

When it comes to the 401k plan you sponsor, as a plan fiduciary you need to understand that a lack of organization can lead to chaos and chaos can lead to potential fiscal liability. This article is all about organization and how it will minimize your financial liability.

Source: Jdsupra.com, August 2021

Climate Change Defines the Fiduciary

It is now time for fiduciaries to begin or continue a process to identify and manage both the investment risks and opportunities arising from climate change per their fiduciary obligations under ERISA, especially Department of Labor Interpretive Bulletin 2015-01. This article discusses the unique nature of climate change risk to investments: namely, that it is likely to affect all asset classes and sectors, creating both risk and opportunities for fiduciaries.

Source: Fiduciarygovernanceblog.com, August 2021

United States District Court Dismisses 401k Plan Recordkeeper Fee Complaint

Recently, the United States District Court for the Western District of Pennsylvania granted a Motion to Dismiss, dismissing ERISA breach of fiduciary duty claims based on excessive recordkeeping fee allegations. The district court addressed the level of detail plaintiffs must provide to move an ERISA breach of fiduciary duty recordkeeping fee allegation from possible to plausible under Federal Rule of Civil Procedure 12(b)(6).

Source: Erisalitigationadvisor.com, August 2021

Collective Investment Trusts: The Basics

As the number of collective investment trusts continues to grow, there are still many investment advisors and retirement plan trustees that are unfamiliar with these investment vehicles. This short article reviews the basics.

Source: Eisneramper.com, August 2021

State-Run Retirement Plans: An Insider's Perspective

Slowly but surely, states are adopting programs to provide retirement plan coverage to people whose employers do not. The plans that are in place are growing in participation and assets, but what does an industry insider think?

Source: Asppa.org, August 2021

Cybersecurity and Related Legal Risks Come Home to ERISA Plans

ERISA-covered plans have entered the digital world. As the amount of confidential information about plan participants that is stored in multiple information systems, and shared among plan service providers, increases, so, too, do the legal risks. The DOL has now made cybersecurity risk an enforcement priority; the courts have started to wrestle with whether participant data is a "plan asset." Plan sponsors and service providers should brace themselves.

Source: Stradley.com, August 2021*

Court Denies Dismissal of Amway ERISA Lawsuit

The U.S. District Court for the Western District of Michigan has ruled against the defense's dismissal motion in an ERISA lawsuit filed last year against Alticor Inc., the parent company of Amway. Among other allegations, the complaint says the defendants continued to offer certain investment options despite the availability of identical or similar investment options with lower costs and/or better performance.

Source: Planadviser.com, August 2021

Retirement Perspectives Brighten, But One Regret Still Looms Large

While most expect their standard of living in retirement to be about the same, or a little better than it is now, one regret looms large. According to new research by American Century Investments, 40% worry about running out of money in retirement, and half that many (18%) are concerned about the loss of income and the biggest life regret is not saving more for retirement, cited by just over a third (35%) of respondents. That far outnumbered regrets about career, personal relationships, not doing enough to enjoy life, or "not being a better person overall."

Source: Ntsa-net.org, August 2021

DOL "Encourages" Retirement Plan Fiduciaries to Recoup Uncashed Checks From Prior Recordkeepers

Taking the form of a letter-based initiative, the DOL is now urging retirement plan fiduciaries to recoup amounts held by former recordkeepers or paying agents that might have been overlooked during the transition of the service provider relationship to a new vendor. These letters notify retirement plan fiduciaries of the existence of small uncashed check balances, and direct plan fiduciaries to coordinate with former recordkeepers to restore these amounts to the participants and beneficiaries who failed to cash distribution checks.

Source: Morganlewis.com, August 2021

401k Suit Claims Higher Revenue-Sharing Funds Should Have Been Used

Had Juniper Networks' plan used higher-revenue-sharing share classes, net costs conceivably could have been lower, if those fees were rebated back to participants, according to the complaint.

Source: Investmentnews.com (registration may be required), August 2021

Data on Retirement Contributions to Defined Contribution Plans

Individuals can save for retirement in two types of tax-advantaged accounts: defined contribution and individual retirement accounts. This Congressional Research Service report provides Internal Revenue Service data on contributions to DC accounts in 2018.

Source: Crsreports.congress.gov, August 2021

Changing DC Plan Recordkeepers Can Be Complex

Although DC plan services have become more standardized over the years, the process of moving from one recordkeeper to another is complex. Risks associated with a conversion include the potential for unexpected disruption to participant accounts, lengthy blackout periods, lost data, costly reconciliations, and misunderstood communications. This paper covers steps for successful implementation and management of risks, three critical components of painless recordkeeper transition, and common transition challenges.

Source: Segalco.com, August 2021

6th Circ Rejects Bankruptcy Shield for 401k Contributions, in Certain Cases

Individuals who have filed for Chapter 13 bankruptcy may not protect 401k contributions from creditors if they were not already making those contributions in the months leading up to the bankruptcy, an appeals court ruled.

Source: Reuters.com, August 2021

Ensuring Clean Participant Data

One of the most critical aspects in maintaining a healthy retirement plan is guaranteeing clean participant data, says John Bikus, president of PBI Research Services, a provider of death audit and location services. Keeping participant data accurate could help plan sponsors avoid dealing with missing participants or a cybersecurity attack.

Source: Plansponsor.com, August 2021

Law Group Argues That Court Misapplied "Thole" Ruling in ERISA Case

An amicus brief filed in a case involving Universal Health Services says a district court erred when it found the plaintiffs have standing to sue over 401k plan investments in which they did not invest.

Source: Planadviser.com, August 2021

IRS Updates Universal Availability Requirement Information for 403b Plans

The IRS has updated the information it provides concerning the universal availability requirement for 403b plans. The information is contained on the IRS website, with hyperlinks to additional resources.

Source: Ntsa-net.org, August 2021

Plaintiffs Make a Splash in SeaWorld 401k Lawsuit

SeaWorld this week was sued by several participants in its $310 million 401k plan, allegedly for letting fees for investments and service providers run out of control. Part of the case involves adviser compensation.

Source: Investmentnews.com (registration may be required), August 2021

Plan Committee Checklist to Reduce Your Risk of an Excessive Fee Lawsuit

Your plan committee can have the most diligent process for choosing and monitoring plan administration and investments, but that will not prevent an excessive fee lawsuit. Even plans with the best consultants and quality 3(21) and 3(38) fiduciary investment advisors still get sued. Here is a checklist to help de-risk your plan.

Source: Euclidspecialty.com, August 2021

Embezzler's 401k Tapped for Restitution

Can a 401k account be accessed as restitution for embezzlement from the company that sponsors the 401k? In the case at hand (United States v. Frank), Jon Lawrence Frank embezzled over $19 million from his former employer, NCI Information Systems. This appeal arises out of the government's effort to garnish Frank's 401k retirement account under the Mandatory Victims Restitution Act of 1996 to "further satisfy the criminal restitution order against him."

Source: Asppa.org, August 2021

Managing Inflation Within Target-Date Strategies

Target retirement strategies continue to grow as a leading default vehicle, offering professionally managed, age-appropriate portfolios that automatically rebalance to keep participants on target. However, there are key differences between providers in how each strategy manages key investment risks as they evolve in importance for participants at each stage of their careers. Inflation is one of these key investment risks that need to be managed to deliver successful retirement outcomes.

Source: Ssga.com, August 2021

IRS Publishes Updated Version of EPCRS

The IRS published an updated version of the Employee Plans Compliance Resolution System in Revenue Procedure 2021-30. This updated version supersedes the previous version outlined in Revenue Procedure 2019-19 and includes changes applicable to both defined benefit and defined contribution plans. Notably, the updated version of EPCRS provides several changes reviewed here.

Source: Reinhartlaw.com, August 2021

An ESG Refresher as DOL Makes Progress on New Regs

Industry experts are watching for the imminent filing of new Department of Labor regulations about the use of environmental, social, and governance-themed portfolios by tax-advantaged retirement plan investors.

Source: Planadviser.com, August 2021

Tips for Plan Committee Best Performance

Plan committees serve an important role, helping plan sponsors provide benefits, as well as protecting the plan and plan sponsor. A recent blog entry offers tips on how a plan committee can best perform its duties.

Source: Ntsa-net.org, August 2021

Recordkeeper Consolidation Be Dammed; Advisors, Claim Your Role!

It's interesting to look through a list of all the recordkeepers who have exited the DC business or spun off their recordkeeping shops in recent years. Everyone is wondering who's next? So what's a Retirement Plan Adviser to do? After all, the worst thing an RPA can do is place a client with a provider who then promptly exits the business. First and foremost, RPAs need to claim their proper role as the retirement coach, the plan architect, and the Chief Retirement Officer.

Source: Nwpsbenefits.com, August 2021

EBSA Drops Off ESG, Proxy Voting Response at OMB

The Employee Benefit Security Administration has dropped off documents at the Office of Management and Budget in response to two Executive Orders from President Biden. The submission is titled "Implementing Executive Orders 13990 and 14030."

Source: Napa-net.org, August 2021

Form 5500 Clarification: Better Late Than Never

One of the highly useful provisions from the SECURE Act is the ability to adopt a new plan after the end of the plan year, as late as the filing deadline for the employer's tax return. This provision created a significant question concerning Form 5500 filing: does a plan that was adopted after the end of 2020 but effective for 2020 (and for which there were no plan assets as of December 31, 2020) need to file a Form 5500 for the 2020 year?

Source: Ferenczylaw.com, August 2021

District Court Partially Dismisses ERISA 401k Fee and Performance Claims for Lack of Standing

A federal district court in New York recently granted Omnicom Group Inc.'s motion to dismiss, for lack of Article III standing, claims challenging the offering of investment options in Omnicom's 401k plan in which the plaintiff participants did not invest. The court denied Omnicom's motion to dismiss, however, with respect to the remainder of the claims, which alleged that Omnicom's administrative committee breached its fiduciary duties under ERISA by including allegedly costly and underperforming funds in its 401k plan, causing the plan to pay excessive recordkeeping fees and offering an investment lineup that was overly expensive.

Source: Erisapracticecenter.com, August 2021

Who is Considered an Employee for Retirement Purposes?

Who is considered an employee for retirement purposes? Why is it important? The answer to this question can be very complex and cause issues when not done correctly.

Source: Consultrms.com, August 2021

How Important are Beneficiary Forms?

When hiring a new employee, one of the initial tasks given to that employee is completing various beneficiary forms for the company's benefit plans. Most people will fill it out and not think about that initial election ever again. Some employees may not fill one out at all. So, why is it a big deal?

Source: Consultrms.com, August 2021

Who is Responsible for Plan Mistakes? Benefits of Outsourcing Plan Administration

Who is responsible when a plan fails to apply the correct definition of compensation in determining benefits, fails to calculate vesting service correctly, or doesn't make distributions to participants who need to get required minimum distributions? Plan sponsors are often surprised to learn that they are. This article reviews why your recordkeeper is not responsible.

Source: Cohenbuckmann.com, August 2021

Pros and Cons of Pooled Employer Plans

The SECURE Act created a new type of defined contribution multiple employer plan, the pooled employer plan. Unlike previous versions of multiple employer plans, it need not be limited to employers sharing a nexus or interest or located in the same geographical area. Moreover, the plan as a whole is protected from disqualification due to the non-compliance of a participating employer, as long as the plan provides a mechanism for expelling a chronically non-compliant employer and holding such employer responsible for its noncompliance. As a result, pooled employer plans may be an attractive option for some employers.

Source: Venable.com, August 2021*

Will Gen Z Be the First True DC Plan Generation?

While Millennials have had access to defined contribution plans for their full working careers, survey data suggests Generation Z started saving in earnest much earlier, in part because their Generation X parents have demonstrated the value of self-directed savings.

Source: Planadviser.com, August 2021

Retirement Plan Access, Participation Vary Highly

Geography is more than maps and topographic features, it also can suggest how much work there is to do in various regions and states to increase access to retirement plans and participation in them.

Source: Ntsa-net.org, August 2021

Illinois Expands its Secure Choice Mandatory Retirement Savings Program

Employers in Illinois with at least 5 employees must soon comply with the Illinois Secure Choice Savings Program Act or offer employees an employer-sponsored retirement plan.

Source: Benefitslawadvisor.com, August 2021

Connecticut to Launch Pilot of Auto-IRA Program

The Connecticut Retirement Security Authority has announced the launch of a pilot of MyCTSavings, the state-run retirement savings program intended to provide coverage for private-sector employees whose employers do not offer them a plan. The pilot is slated to begin in September.

Source: Asppa-net.org, August 2021

Plans Retroactively Adopted After the End of the Plan Year Have No 2020 Form 5500 Filing Requirement

The Internal Revenue Service has announced a significant update with regard to Form 5500 filing requirements. Section 201 of the SECURE Act permits an employer to adopt a retirement plan after the close of the employer's taxable year (by the due date, including extensions, for filing its tax return for the taxable year) and elect to treat the plan as having been adopted as of the last day of the taxable year, a provision that applies to plans adopted for taxable years beginning after Dec. 31, 2019.

Source: Asppa-net.org, August 2021

What Drives Fiduciary Liability?

Aon surveyed 12 top carriers for fiduciary liability insurance to understand their views on the biggest sources of fiduciary risk within the control of fiduciaries for defined benefit and defined contribution plans subject to ERISA. Read to learn more about the key takeaways from the results.

Source: Aon.com, August 2021

Use of CITs in 401ks Continues Growth

The use of collective investment trusts has surpassed the use of mutual funds in 401k plans with more than $1 billion in assets, according to data from BrightScope, part of ISS Market Intelligence. CITs more strongly dominate the large plan market, particularly within target-date funds, BrightScope says.

Source: Planadviser.com, August 2021

Connecticut to Launch Pilot of Auto-IRA Program

The Connecticut Retirement Security Authority has announced the launch of a pilot of MyCTSavings, the state-run retirement savings program intended to provide coverage for private-sector employees whose employers do not offer them a plan. The pilot program is slated to begin in September.

Source: Napa-net.org, August 2021

A Fiduciary Checklist for 401k Sponsors Is 79 Items Long

A checklist unveiled this week by a fiduciary training group is designed to help 401k sponsors protect themselves from lawsuits. The new checklist, which the group calls FORT, or Fiduciary Oversight of Responsibilities and Tasks, will make them aware, outlining 79 different items that retirement plans must have covered, said Don Trone, CEO of CBCF. Given how rampant 401k litigation has become, that is crucial, he said.

Source: Investmentnews.com (registration may be required), August 2021

Fifth Circuit Holds Participants Lack Standing to Challenge Plan Investment Options

Last year, a judge in the Northern District of Texas dismissed the case, holding that plaintiffs lacked Article III standing to pursue their claims. In so holding, the court explained that any harm from defendants' failure to offer a stable value fund was speculative since: (i) plaintiffs did not show they would have invested in a stable value fund had it been available to them; and (ii) even when it did become available, plaintiffs did not invest in it. The Fifth Circuit agreed with the district court's conclusion that the plaintiffs lacked standing to bring their claims, but employed slightly different reasoning.

Source: Erisapracticecenter.com, August 2021

Tips for Evaluating a Target-Date Fund

Since target-date funds were introduced to the Canadian market in the early 2000s, they've become the dominant investment choice for defined contribution pension plan members. The funds, which are balanced with dynamic asset mixes that adjust as members approach retirement, are offered in a series with each fund designed to offer an optimal asset mix for investors with similar time horizons to retirement. But there are key differentiating factors to consider when evaluating different TDF options.

Source: Benefitscanada.com, August 2021

Good News: IRS Issues Updated Guidance Enhancing Plan Correction Programs

On July 15, 2021, the IRS updated its Employee Plans Compliance Resolution System by issuing Revenue Procedure 2021-30. The EPCRS changes and revisions, which generally became effective on July 16, 2021, are beneficial to plan sponsors, participants, and the retirement plan community. Noteworthy changes made by the IRS in Rev. Proc. 2021-30 are reviewed here.

Source: Workforcebulletin.com, August 2021

Key Trends and Developments in the Retirement Industry for 2021

A recent webinar reviewed key DC trends and developments in the retirement industry for 2021, pinpointing diversity and inclusion (D&I), retirement confidence, and environmental, social, and governance investing as top highlights.

Source: Planadviser.com, August 2021

How to Prepare for a Retirement Plan Audit

In most cases, the odds of receiving notice from the IRS or DOL stating that they plan to audit your retirement plan are slim. However, if that situation arises, it is important to be prepared for what lies ahead. Knowing what is involved can enable you to stay on top of your legal and regulatory obligations, as well as help you successfully navigate through a plan audit.

Source: Orba.com, August 2021

Texas Retirement Plan Hit by Cyber Theft

Another retirement plan cyber theft scheme has come to light and the perpetrators sentenced. This particular intrusion involved the Texas Employees Retirement System and the machinations of Olumide Bankole Morakinyo, 38, a Nigerian national residing in Canada, and Lukman Shina Aminu, a resident of New Hampshire, who created unauthorized accounts for participants in the Employees Retirement System of Texas internet portal.

Source: Napa-net.org, August 2021

Great-West Wins (Again) in Excessive Fee Suit

An excessive fee suit that had been dismissed -- and wound up triggering a sanction (and fine) against the plaintiffs' counsel -- has once again fallen short in its appeal. The suit -- which was dismissed last August -- was two suits, brought by participants (Obeslo, Hall, and Gorrell-Deyerle) in plans that had chosen Empower as recordkeeper, and investment options from Great-West and other fund complexes from which participants could choose.

Source: Napa-net.org, August 2021

Biden's Nominee to Head EBSA Reflects Aggressive Rulemaking Agenda

President Joe Biden's nominee to head the Labor Department's Employee Benefits Security Administration, Lisa Gomez, hints that the DOL is serious about rulemaking. Her career is rooted in ERISA, and her keen understanding of the law would help the DOL as it seeks to implement new rules, lawyers said.

Source: Investmentnews.com (registration may be required), August 2021

Retirement Plans -- IRS Gives New Options for Voluntary Correction but Also Takes Away

The IRS recently issued new guidance for voluntary correction of retirement plan qualification errors in Revenue Procedure 2021-30. The IRS has given practitioners more options for self-correction, including an extension of the time for correcting errors, extending correction methods for certain deferral errors, and providing additional options for dealing with overpayments of benefits. The IRS is taking away the procedure for filing anonymously but has added an option for a pre-filing conference on an anonymous basis.

Source: Employeebenefitslawgroup.com, August 2021

Fiduciary Update | August 2021

In this article, CAPTRUST's Drew McCorkle dishes out the latest in fiduciary updates for the third quarter of 2021. Read on for a rundown of a fee litigations case the Supreme Court is considering, the use of ESG investments in 401k and other individual account retirement plans, why inherited 401k accounts are protected from creditors, and more.

Source: Captrust.com, August 2021

ERISA 403b vs. ERISA 401k

Which is better? It depends! That's the verdict from an industry insider who compared and contrasted the two in a June 29 session of the 2021 NTSA Summit. "A vexing issue," said Mark Heisler, CEO of ADMIN Partners, LLC, of the question. Not only that, he said, it is "probably the number one question he gets." And the answer, he said, "very much depends" on the particular client involved.

Source: Asppa.org, August 2021

Don't Ignore Often-Overlooked Fiduciary Duties

Fiduciary duties must be fulfilled. But some are often overlooked, an industry expert warns. "When a job becomes too familiar it's easy to start taking things for granted," writes Christopher Carosa in Fiduciary News. He adds that the belief that a plan can run itself if "the right pieces" are in place is "a dangerous misperception." Advisors may find Carosa's identification of overlooked duties useful in serving their clients.

Source: Asppa.org, August 2021

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