August 2022 Digest

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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401k Balances Reflect Volatile Period for Markets

According to Charles Schwab's SDBA Indicators Report, a benchmark on retirement plan participant investment activity within self-directed brokerage accounts, the average account balance across all participant accounts finished at $283,485 for the second quarter ending June 30, a 19% decrease year-over-year and a 15% decrease from the first quarter of 2022.

Source: Planadviser.com, August 2022

CalSavers to Cover Nearly all Employees in California

CalSavers, the state-run program that provides retirement plan coverage to private-sector employees whose employers do not, will cover nearly all such employees in the Golden State. Gov. Gavin Newsom on Aug. 26 signed legislation further expanding the program.

Source: Ntsa-net.org, August 2022

Guidance on Employee Benefit Plan Auditor Independence Clears Review

While there are no details yet, the federal government's regulatory dashboard suggests that the DOL may soon release guidance addressing the independence of employee benefit plan accountants. The Office of Information and Regulatory Affairs has concluded a review of an interpretive bulletin concerning the independence of employee benefit plan accountants and presumably their audit functions.

Source: Napa-net.org, August 2022

How Advisors Can Help Clients Invest Sustainably Outside of 401ks

This article is part of a series providing a framework for incorporating sustainable investing into your advisory practice. A previous article explored the limitations and opportunities of investing sustainably within employer-sponsored retirement plans such as 401ks. Advisors supporting clients in investing sustainably outside of these accounts may find more choice but also more complexity.

Source: Morningstar.com, August 2022

How Retirement Plan Advisors Can Lose Clients in a Flash

Building a book of retirement plan clients is tough work. Clients don't fall from trees and it can take months or years to land that potential client you have visited and called countless times. And it is easier to lose a client than it is to gain one. If you follow some of the steps outlined here, you can avoid losing your retirement plan clients.

Source: Jdsupra.com, August 2022

Comparing Seven Defined Contribution Plan Designs - 2022

In designing a retirement plan, you look at the employer's objectives, the need for flexibility, the ages of the key personnel, the salaries of everyone involved, total budgeted dollars, the advantages of adding 401k features, etc. This chart shows the results of an analysis prepared for one company that wanted a defined contribution plan. There were 10 people eligible for the retirement plan, including one owner.

Source: Consultrms.com, August 2022

Arbitration of ERISA Claims Under the Microscope: Where are the Courts and Congress Headed?

We still have no final word from the courts on the enforceability of ERISA mandatory arbitration provisions, but plan sponsors can increase the chances that their mandatory arbitration policies will be upheld by reviewing the reasoning in recent cases. That's assuming that Congress doesn't act.

Source: Cohenbuckmann.com, August 2022

How Gloomy Is the Retirement Outlook for Millennials?

Social, economic, demographic, and public policy shifts have made Millennial retirement security a pressing concern. Many recent trends threaten financial security for future generations of retirees. Male labor force participation pre-age 55 has slumped, men's median earnings have stagnated, marriage and homeownership rates are falling, debt levels remain high, and out-of-pocket spending on medical and long-term services and supports are rising. Other trends are more encouraging, such as women's higher earnings, the rise in labor force participation at older ages, and improvements in educational attainment.

Source: Upenn.edu, August 2022*

Dated Thinking May Be Holding Back Annuities

Annuities deserve a fresh look from plan sponsors, according to retirement industry veterans with years of experience in retirement income strategies. Despite product innovations and improvements, the perception of annuities among many plan sponsors is stuck in the past, says Rona Guymon, senior vice president of annuity distribution, at Nationwide Financial. The persistence of myths and misunderstandings about annuities are likely holding back greater adoption, she adds.

Source: Plansponsor.com, August 2022

Participant Data Claims Dismissed in Excessive Fee Suit

ADP got something of a split decision in an excessive fee case with a federal judge allowing claims regarding high record-keeping fees and expensive investments to proceed but culling claims about the use of participant data. The suit was filed in mid-May 2020 in the U.S. District Court of the District of New Jersey against the fiduciaries of the $4.4 billion ADP TotalSource Retirement Savings Plan (including third-party investment consultant NFP Retirement) on behalf of participants in the MEP.

Source: Napa-net.org, August 2022

DOL Cybersecurity Investigations: The Trap Door to Endless Document Requests?

Parties involved in a DOL investigation often ask a simple question: how much information am I obligated to provide the DOL in response to an administrative subpoena? A recent decision, in the United States Court of Appeals for the Seventh Circuit, Walsh v. Alight Solutions, LLC, provides some guidance.

Source: Groom.com, August 2022

Maintaining Records: Who Does What, and When?

Retaining and maintaining records is not a minor matter, ERISA and DOL regulations make that clear. And yet, says a plan administrator, policies concerning record retention and maintenance are not as common as one may expect.

Source: Asppa.org, August 2022

OregonSaves Has "Meaningfully Increased Employee Savings"

A new study finds that OregonSaves -- launched in 2017 as the first state-sponsored retirement plan -- has "meaningfully increased employee savings," and employees opting out of the program "are often doing so for rational reasons." The study, funded by the U.S. Social Security Administration and conducted by the Michigan Retirement and Disability Research Center, analyzes participation choices, account balances, and inflow/outflow data between August 2018 and April 2020 for OregonSaves.

Source: 401kspecialistmag.com, August 2022

Second Circuit: Participant's 401k Plan Accounts Were Subject to Garnishment

In a dispute involving garnishment of funds in 401k plan accounts, the Court of Appeals for the Second Circuit held that the participant's accounts were subject to garnishment to enforce a restitution order resulting from the participant's criminal convictions.

Source: Westlaw.com, August 2022

Second Circuit Holds Government Can Garnish ERISA-Protected 401k Accounts

The Second Circuit first determined that the MVRA permits garnishment of funds otherwise protected by ERISA's anti-alienation provision. The Government may enforce restitution orders from criminal convictions using the practices and procedures for enforcement of a civil judgment under federal or state law as set forth in the Federal Debt Collection Procedures Act. While ERISA broadly protects retirement benefits from dissipation through payment to third parties -- its anti-alienation provision -- the MVRA permits courts to consider ERISA-protected assets when imposing criminal fines.

Source: Robertsdisability.com, August 2022

CUNA's 401k Latest Targeted in BlackRock TDF Suit

The law firm of Miller Shah LLP has targeted another plan they claim "appear[s] to have chased the low fees charged by the BlackRock TDFs without any consideration of their ability to generate return." This time it's the fiduciaries of the $865 million CUNA Mutual 401k Plan for Non-Represented Employees.

Source: Napa-net.org, August 2022

What You Need to Know About Retirement Plan Committees

Being a retirement plan sponsor can be a bit overwhelming, but a retirement plan committee can be an effective method of managing a retirement plan. Like any tool, a plan committee must be used correctly. This article is about how a plan sponsor can delegate to their retirement plan committee and some of the things they should avoid.

Source: Jdsupra.com, August 2022

Appellate Court Backs DOL in Cybersecurity Subpoena

A federal appellate court says that the Labor Department is allowed to pursue its inquiry into the cybersecurity practices at a large recordkeeper.

Source: Asppa.org, August 2022

Schlichter Slammed (Again) in Empower's Win

"Having already limited Defendants' total recovery to fees and expenses after the start of trial and having further restricted that recovery to no more than $ 1.5 million, the Court finds no basis to further reduce the fee award." And with that, the United States District Court in Colorado affirmed the judgment against high-profile attorney Jerry Schlichter for $1.5 million for "reckless" fiduciary claims.

Source: 401kspecialistmag.com, August 2022

IRS Extends Amendment Deadlines for CARES and SECURE Acts

The IRS released Notice 2022-33, giving retirement plan sponsors a three-year extension to adopt formal plan amendments under the Coronavirus Aid, Relief, and Economic Security Act, the Setting Every Community Up for Retirement Enhancement Act of 2019, and the Bipartisan American Miners Act of 2019. The new deadline, December 31, 2025, applies to mandatory and optional plan amendments under these acts.

Source: Tri-ad.com, August 2022

Avoiding Improper Retirement Plan Distributions

One of the challenges of administering a retirement plan is the timely and proper payment of distributions to plan participants. This responsibility occurs in more than one context and can have several "facts and circumstances" variations.

Source: Penchecks.com, August 2022

Five Dangerous Fiduciary Assumptions

There's an old saying that when you assume... well, here are some assumptions that can create real headaches for retirement plan fiduciaries.

Source: Napa-net.org, August 2022

IRS Extends Deadlines for Amending a Retirement Plan or IRA for Certain Provisions of SECURE Act, Miners Act, and CARES Act

On August 3, 2022, the IRS issued Notice 2022-33 to extend the deadlines to amend certain retirement plans (such as qualified 401(a) plans, 403b plans, governmental 457b plans, and individual retirement arrangements) for certain provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 and section 104 (relating to reduced age for in-service distributions for qualified 401(a) plans and governmental 457b plans) of the Bipartisan American Miners Act of 2019.

Source: Icemiller.com, August 2022

When Should Sanctions Be Imposed in ERISA Class Actions?

Sanctions are a rarely utilized tool to combat abusive litigation. This is because most high-profile defense firms rarely seek sanctions, as well as the fact that modern courts tolerate most lawsuits. But if you apply the sanctions standard of the Great-West case to many of the skyrocketing numbers of ERISA class actions being filed today, it is clear, says the author of this article, "that sanctions should be imposed in many of the recently filed cases."

Source: Euclidspecialty.com, August 2022

Plan Sponsor Activity and Engagement Set to Heighten: Study

Fidelity Investments announced the results of the 13th edition of its Plan Sponsor Attitudes Study. The study characterizes 2022 as a year of change for the retirement plan industry with plan activity and competition amongst plan advisors hitting multiyear highs.

Source: Businesswire.com, August 2022

Emergency Savings = Better Retirement?

Of all the statistics about financial anxiety, one of the most alarming is that 36% of Americans in 2020 reported that they would be unable to meet an unexpected $400 expense without borrowing or selling a personal item. Alarming, yes but what does that have to do with retirement? A great deal. There are two ways a financial emergency can undermine retirement and why plan sponsors may want to consider taking action. The first is the direct damage that emergency withdrawals or loans can do to retirement savings. The second is more subtle.

Source: Blackrock.com, August 2022

Nearly Half of Plan Sponsors Considering Changing Advisors, Recordkeepers

Competition amongst plan advisors and recordkeepers is reaching an all-time high, with 47% of plan sponsors considering a new advisor and 48% considering a change of recordkeepers for their 401k plans. This is according to the 13th edition of Fidelity Investments' Plan Sponsor Attitudes Study, released today, which found that in 2022 plan sponsors are the most active in years in making big changes to their retirement plans.

Source: 401kspecialistmag.com, August 2022

The Connection Between Emergency Savings Accounts and Retirement

Plan sponsors can help drive higher retirement plan contributions from workers by offering robust emergency savings accounts that hew to their preferences, research from a pair of nonprofits shows. The research shows that for low- and moderate-income workers, access to emergency savings accounts is likely to bolster retirement contributions and provide greater financial security.

Source: Plansponsor.com, August 2022*

Seventh Circuit Issues Key Stock-Drop Decision in Boeing Max Case

The 7th U.S. Circuit Court of Appeals in Chicago on August 1 upheld a lower court's dismissal of a case brought against Boeing in 2019 over the drop in Boeing's stock price. One expert attorney says the decision has particular importance to plan sponsors and fiduciaries who have employer stock as an investment.

Source: Planadviser.com, August 2022

Modest Deferral Rate Increases Could Have a Big Impact on Retirement Readiness

A modest increase in participant elective deferral rates would enable most plan participants to attain a 75% replacement rate in retirement, according to new research by Vanguard. To assess whether Vanguard DC plan participants are saving optimally in their current workplace retirement plan, Vanguard researchers analyzed approximately 1.9 million eligible employees and 1.5 million actively contributing participants in approximately 880 plans for which the firm had completed compliance testing as of December 2020.

Source: Ntsa-net.org, August 2022

Division of Fiduciary Duties Proves Key to Success in Stock-Drop Lawsuit

On August 1, 2022, the United States Court of Appeals for the Seventh Circuit affirmed the lower court's dismissal of a "stock-drop" lawsuit against Boeing. The Seventh Circuit based its conclusion on the fact that an independent fiduciary, rather than the Boeing defendants, had exclusive fiduciary responsibility for the company stock fund and therefore had no duty to disclose corporate insider information to the participants or the independent fiduciary.

Source: Groom.com, August 2022

Morningstar's Active/Passive Barometer: Takeaways for 401k Fiduciaries

Morningstar's Active/Passive Barometer is a semiannual report that measures the performance of active funds against comparable passive funds. Over the years, the report has found that most active funds underperform their passive counterparts and that higher-cost funds are more likely to underperform. This article reviews what 401k fiduciaries can take from the report.

Source: Employeefiduciary.com, August 2022

Compliance Check: Amending Your 401k Plan Document on Time

This article looks at the deadlines for a plan sponsor of an individually-designed 401k plan to adopt legally-required and discretionary 401k plan amendments, as well as recent IRS Notice 2022-33, which extended the deadline for certain legally-required 401k plan amendments related to the SECURE Act and the CARES Act.

Source: Foley.com, August 2022

2022 Safe Harbor 401k Deadline Quickly Approaching

The IRS deadline to establish a new 2022 Safe Harbor 401k plan is October 1, meaning there is still time for small business owners to establish a new plan and take advantage of maximum contribution limits.

Source: 401kspecialistmag.com, August 2022

DOL Proposes Changes to the QPAM Exemption

The qualified investment professionals who rely on the QPAM Exemption are those who manage the assets of certain employee benefit plans subject ERISA, plans and accounts subject to section 4975 of the Internal Revenue Code, and plan asset vehicles. The DOL has given interested parties until September 26, 2022, to provide comments on the proposed changes to the exemption. Here is a summary of the proposed changes.

Source: Winston.com, August 2022

IRS Private Letter Ruling Addresses DB-to-DC Asset Transfer

While it applies only to the immediate case, the IRS' approval of a transfer of excess assets from a terminating pension plan to three ongoing defined contribution plans is instructive for other taxpayers.

Source: Planadviser.com, August 2022

Judge Slams Plaintiffs' Attorneys With $1.5 Million Judgement for "Reckless" Suit

A federal judge has affirmed a $1.5 million judgment against Schlichter Bogard & Denton LLP and Schneider Wallace Cottrell Konecky LLP for their role in bringing a "reckless" excessive fee suit.

Source: Napa-net.org, August 2022

A Beneficiary Form Is the Most Important Employee Benefit Form

The most important form in all employee benefits is an individual employee's 401k plan beneficiary form. In the absence of a valid beneficiary form, 401k plan documents will often control the distribution of plan proceeds upon an employee's death. In other words, the distribution of large sums of money could potentially be against the deceased employee's wishes. The best way to avoid this issue is to make sure that an individual employee's 401k beneficiary form exists, is current, and matches any estate planning documents.

Source: Masudafunai.com, August 2022

What Retirement Policies Should Your 401k Plan Have in Place

Having clear policies and procedures for 401k plans helps employees involved in the plan administration do their job more efficiently by mapping out steps to take when various situations arise. ERISA and the DOL guidance recommend retirement plans maintain some of these policies and, while not required by law, are helpful in the event of a DOL audit or participant litigation. This article reviews what policies you should consider having and what they entail.

Source: Consultrms.com, August 2022

IRS Notice 2022-33 Provides a Partial Extension of the 2022 Plan Amendment Deadline

The IRS has announced an extension of the deadlines for amending 401(a) qualified defined contribution and defined benefit plans, 403b plans, and governmental 457b plans. While the extension provides welcome relief in certain cases, some plan sponsors and Pre-Approved Plan Providers will still need to amend plans for certain CARES Act provisions and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 by the original amendment deadline, the last day of the 2022 plan year.

Source: Asc-net.com, August 2022

Fidelity Q2 Analysis Shows Just How Hard Stock Losses Hit 401ks

Given the stock market's dismal performance in the second quarter of 2022 -- and the first half of the year in general -- it's no surprise that average 401k account balances at plans record kept by Fidelity decreased significantly during the second quarter that ended June 30.

Source: 401kspecialistmag.com, August 2022

Four Trends to Watch in 2022 and Beyond

Insights from the inaugural 2022 BlackRock "Read on Retirement" reveal a shifting landscape following over two years of market volatility, inflation, and a pandemic. The pandemic and recent market conditions understandably caused people to rethink their outlook on retirement and what they will need. It also inspired employers to offer more strategies to help employees save for the short and long-term. Here are four key findings from the survey that are trends to watch this year and beyond.

Source: 401kspecialistmag.com, August 2022

More TDF Underperformance ERISA Lawsuits Filed

This summer, plaintiffs represented by the increasingly active law firm Miller Shah LLP have filed a cluster of new ERISA lawsuits. The defendants in the cases include well-known national employers across the U.S., including Citigroup, Stanley Black & Decker, Booz Allen, Capital One, Wintrust, Cisco, and Genworth. The lawsuits all include nearly identical ERISA fiduciary breach allegations against the defendants, but these allegations stand in sharp contrast to the broader landscape of ERISA litigation.

Source: Planadviser.com, August 2022

Excessive Fee Suit Targets RK, Managed Account Fees

Another large 401k plan has been sued for a breach of fiduciary duty involving excessive recordkeeping fees and managed account services it says were worth nothing. This one has been filed in the US District Court for the Northern District of Illinois individually and as representative of a Class of Participants and Beneficiaries of the $1.5 billion Dover Corporation Retirement Savings Plan which, according to the suit, has some 18,331 participants.

Source: Napa-net.org, August 2022

A Guide Path for Your Glide Path(s)

A recent report and a new wave of litigation remind us that all target-date funds are not designed the same. A recent Morningstar whitepaper cautioned that "through" glide paths generally include around 13 percentage points more in equity at age 65 than their peers invested in "to" glide paths, as the average "through" series holds 46% in stocks versus just 33% for the average "to" series. That makes them riskier (or at least more volatile), and potentially riskier than those who defaulted into those options may know, or desire.

Source: Napa-net.org, August 2022

Appellate Court Backs DOL in Cybersecurity Subpoena

A federal appellate court says that the DOL is allowed to pursue its inquiry into the cybersecurity practices at a large recordkeeper. Alight argued on appeal that the subpoena is unenforceable because the DOL lacks authority to investigate the company, or cybersecurity incidents generally. Alight also argued that the subpoena's demands were too indefinite and unduly burdensome and that the district court abused its discretion by denying Alight's request for a protective order to limit the production of certain sensitive information.

Source: Napa-net.org, August 2022

401k Plan Provisions That Should Be Reviewed for "Tinkering"

When you set up a 401k plan, the plan provisions are not set in stone, so it's beneficial to look at them to determine whether they still fit your needs and the needs of your employees. Here are a few you might tinker with.

Source: Jdsupra.com, August 2022

Divorce and Retirement: It's a Matter of Trust

It's in your best interest to have a collaborative team that's working together, as well as someone who knows the divorce laws in your state and someone who knows finance.

Source: Investmentnews.com, August 2022

Retirement Protection Act Proposed in House

Representatives David Schwikert and Byron Donalds have introduced H.R. 8579, the Retirement Protection Act. The bill proposes modification of the saver's credit by replacing the three-tier formula with a single 50 percent credit percentage on contributions up to $2,000, with phase outs beginning at certain AGI thresholds.

Source: Futureplan.com, August 2022

Proposed QPAM Amendment Would Expand Criminal Disqualification Rules

In addition to the current list of offenses that disqualify a manager from acting as a QPAM, the amendment would codify the DOL's interpretation that foreign crimes substantially equivalent to the enumerated U.S. offenses result in disqualification. The amendment would add categories, short of actual crimes, permitting the DOL to strip a manager of QPAM status. The Amendment would also require QPAM management agreements to indemnify plan clients against losses resulting from the QPAM's disqualification, and impose a mandatory one-year winding down period following disqualification to help plans mitigate disruptions from changing advisors.

Source: Debevoise.com, August 2022

Canadian Employers Embracing Innovation, Flexibility in DC Plan Design

With inflation reaching its highest level in four decades and people facing several competing financial priorities, including simple day-to-day expenses, Canadian plan sponsors are bringing flexibility to their programs as they focus on catering to different needs and expanding the scope of their savings options.

Source: Benefitscanada.com, August 2022

IRS Extends Retirement Plan Amendment Deadlines

Many tax-qualified retirement plans, including non-governmental 403b plans and IRAs, were running short on time to make needed amendments to plan documents before the December 31, 2022, deadline to comply with recently enacted law changes. Under the new Notice 2022-33, plans and IRAs now have until December 31, 2025, to amend those documents.

Source: Bdo.com, August 2022

Are Automatic 401k Features Friend or Foe?

Every time it seems there's nothing new to say about auto features, new questions arise. Most of them spring from fallacies that continue to be perpetuated throughout the 401k industry. This article digs into many of the misunderstandings and why they each may be inaccurate.

Source: 401kspecialistmag.com, August 2022

Lawsuit Against Northern Trust Over TDFs Will Proceed

A federal judge has refused to dismiss a lawsuit against fiduciaries of the Northern Trust Company Thrift-Incentive Plan that alleges that because the defendants failed to remove underperforming funds from the plan or negotiate lower, reasonable fees, participants' account balances have suffered.

Source: Planadviser.com, August 2022*

Participant Loans: Common Loan Errors and How to Fix Them

Prohibited transaction violations associated with participant loans, which are corrected under the DOL's separate Voluntary Fiduciary Correction Program, are less common than the day-to-day operational failures that can result in taxation to the participant. Therefore, this article focuses on the solutions for correcting participant loan errors through the Employee Plans Compliance Resolution System and its Self-Correction Program.

Source: Newfront.com, August 2022

Participant Loans: Technical and Fiduciary Considerations

Of utmost importance is the obligation of plan sponsors to comply with the legal requirements governing participant loans. The failure to comply may lead to a taxable event for the borrowing participant and a prohibited transaction for the plan fiduciaries. Here is a review of the technical and fiduciary considerations involved when participant loans are available through your company 401k plan.

Source: Newfront.com, August 2022

State-Mandated Retirement Plans Gain Traction

This article explains that there is no federal mandate for businesses to offer retirement plans, but some states are filling the void. It detail which states have established mandates, and which ones have put them into action. And it points out why these moves may prompt some businesses to offer retirement plans beyond the states' mandate.

Source: Massmutual.com, August 2022

Employee Deferrals and Employer Contributions on Bonus Payments May Pose Challenges

An issue that can arise when considering the potential qualified status of a tax-qualified retirement plan is whether the definition of compensation under a plan is being properly implemented based on a participant's elective deferral election and corresponding employer contributions based on an employee's elective deferral election and the plan document. This article provides background on this issue and discusses the consequences of providing separate deferral elections on bonuses, the potential risks of permitting such separate elections, and related considerations that are important to maintain the tax-qualified status of a plan.

Source: Groom.com, August 2022

BlackRock 401k Investment Suits Send Message "Nobody's Safe"

A flurry of new 401k lawsuits challenging companies that offer their workers conservative, low-cost target-date funds has enraged retirement industry insiders who say the complaints mean no retirement plan is safe from litigation. The class actions are leveled at major companies defaulting employee investments into a suite of BlackRock index funds that automatically de-risk investments according to a specific date, usually when investors are expected to retire.

Source: Bloomberglaw.com, August 2022

Hot July Brought Cool 401k Traders

Amid the dog days of summer, 401k plan investors were light traders in July, according to the Alight 401k Index. There were no above-normal trading days, as Wall Street posted its best month since November 2020, the firm notes in its July 2022 Observations. In comparison, the month of June saw five above-normal trading days. Overall, there have been 33 above-normal trading days for the year to date.

Source: Asppa.org, August 2022

Why You Need Cybersecurity Insurance and How to Get It

The topic of cybersecurity insurance has crept to the top of the charts for the DOL's ERISA Advisory Council. Each year, the EAC picks topics it deems crucial to the administration of ERISA. For their May 6, 2022, meeting, they chose cybersecurity insurance and employee benefit plans as one of their topics. When the DOL and, specifically, the EAC take a closer look at a topic like cybersecurity insurance for those who handle employee benefit plan data, you can rest assured it will soon become a mandatory focus.

Source: Penchecks.com, August 2022

Senate Bill Would Curb ESG Investing in Retirement Plans

The Maximize Americans' Retirement Security Act (S. 4613), legislation introduced July 26 by Sen. Mike Braun, would clarify that the fiduciary duty of plan administrators is to select and maintain investments based solely on "pecuniary" financial factors. Joining Braun as cosponsors are Sens. Richard Burr, Tommy Tuberville, Cynthia Lummis, Roger Marshall, Roger Wicker, Steve Daines, and James Inhofe.

Source: Napa-net.org, August 2022

CommonSpirit Inspires Another Motion for Reconsideration in Excessive Fee Suit

In today's labor markets, much is said about offering competitive benefits. As employers compete for talent, retirement benefits have come more to the forefront as a way employers can offer an enhanced compensation package to potential employees or retain existing ones. However, some retirement plans have been left to languish in recent years. Since an employee's savings is generally the biggest driver of retirement benefits, there's a tendency to just leave it at that, thinking that as long as you are offering something to your employees and that your plan is meeting all the legal requirements, you're good. But if you are in a competitive hiring environment, that mindset may not cut it anymore.

Source: Napa-net.org, August 2022

Common 401k Plan Mistakes: Your Plan Isn't Competitive

In today's labor markets, much is said about offering competitive benefits. As employers compete for talent, retirement benefits have come more to the forefront as a way employers can offer an enhanced compensation package to potential employees or retain existing ones. However, some retirement plans have been left to languish in recent years. Since an employee's savings is generally the biggest driver of retirement benefits, there's a tendency to just leave it at that, thinking that as long as you are offering something to your employees and that your plan is meeting all the legal requirements, you're good. But if you are in a competitive hiring environment, that mindset may not cut it anymore.

Source: Conradsiegel.com, August 2022

IRS Extends Deadline to Adopt Plan Amendments Reflecting Recent Law Changes

The table here shows the original and revised amendment adoption deadlines for IRAs and various types of retirement plans. Plan sponsors will notice that under Notice 2022-33, the amendment deadline for the applicable SECURE Act, Miners Act, and CARES Act provisions is the same. The IRS anticipates that this will allow plan sponsors to adopt a single amendment that covers all three pieces of legislation, as applicable.

Source: Benefitsnotes.com, August 2022

How Are State Auto-IRAs Impacting the Small-Plan Market?

Employers in California, Illinois, and Oregon, three of the first states to launch programs to help private sector workers save for retirement, were still creating new plans in 2020 and were shedding existing plans at rates slower than or largely comparable to the national average, according to a newly updated analysis of Form 5500 data.

Source: Asppa.org, August 2022

The DOL Proposes to Update QPAM Exemption

One of the most frequently used prohibited transaction class exemptions is Prohibited Transaction Class Exemption 84-14, which provides an exemption for Qualified Plan Asset Managers. PTE 84-14 is generally regarded as the benchmark of prohibited transaction exemptions. However, in light of the increased frequency with which affiliates of QPAMs have been involved in foreign criminal conduct, DOL determined that it was appropriate to propose updates to the exemption impacting the qualification of the applicant.

Source: Wagnerlawgroup.com, August 2022

The New Vesting Schedule Debate

Surveys and anecdotal evidence suggest plan sponsors are shortening their plan's vesting periods, but there remains disagreement in the industry about whether vesting schedules may disappear.

Source: Planadviser.com, August 2022

Will New 401k Compliance Testing Issues Arise Because of COVID-19 Workforce Changes?

To help ensure that a 401k plan does not favor business owners or other highly compensated employees, plan sponsors are required to perform specific nondiscrimination tests. The COVID-19 pandemic is providing challenges in meeting these nondiscrimination tests with qualified 401k plans that have previously not experienced discrimination testing issues.

Source: Fulcrumpartnersllc.com, August 2022

Target-Date Funds: Evaluating and Selecting

The Qualified Default Investment Alternative investment decision is among the most important investment-related decisions a plan sponsor will make on behalf of plan participants. The selection of a target-date fund is likely to have the greatest impact on the largest number of participants and their ability to achieve their retirement objectives. Target-date products are relatively immune to participant inaction because they evolve as participants age. This characteristic makes target-date funds the most attractive QDIA and the most complex alternative. Because the decision is so critical, it carries major fiduciary implications.

Source: Fiducientadvisors.com, August 2022

IRS Extends Certain Amendment Deadlines for the SECURE and CARES Acts

On August 3, 2002, the IRS issued Notice 2022-33 which extends certain deadlines for qualified plans to amend their documents for the SECURE Act, the Miners Act, and the CARES Act. Before this Notice, amendments for all provisions of the Acts were due by the last day of the plan year beginning on or after January 1, 2022 (December 31, 2022, for calendar year plans).

Source: Erisadc.com, August 2022

Investments in Technology and Automation Pay Off for Retirement Plan Providers

Plan providers are making sizable investments in technology to enhance their suite of online resources to improve digital participant experiences and better connect with a younger generation entering the workforce, according to the latest Cerulli Edge -- U.S. Retirement Edition. From education-oriented designs to targeted communications, plan providers are leveraging the latest advances in digital technologies to complement or enhance human-provided services.

Source: Cerulli.com, August 2022

IRS Extends Retirement Plan Amendment Deadlines

Plan sponsors can certainly wait to adopt these amendments, and this would also allow further changes addressing subsequent guidance on the SECURE Act as well as future legislation to be addressed. However, for plan administration purposes, it could be helpful to amend plans before the end of the year and also provide participants with a summary of material modifications describing the changes, but this may require an additional amendment by the extended deadline.

Source: Bradley.com, August 2022

Avoiding Common Retirement Planning Mistakes

Most people dream of the day when they can go to bed without having to set an alarm for work. Retirement might seem like a far-off reality but retiring with a viable plan and sufficient money isn't something that happens overnight. To live out your retirement comfortably, you'll have to think ahead and plan accordingly. Unfortunately, it's easy to fall prey to common retirement planning missteps.

Source: Bks-partners.com, August 2022

Plan Fiduciaries: The DOL Proposes Enhanced QPAM Requirements

On July 26, 2022, the DOL released a proposed amendment to Prohibited Transaction Class Exemption 84-14, known as the Qualified Professional Asset Manager exemption. The QPAM exemption is frequently relied on by investment fiduciaries, including fund managers and investment advisers, to avoid engaging in transactions concerning employee benefit plans that might otherwise be prohibited by ERISA. If adopted, the proposed amendment would, among other things, increase the minimum capitalization and assets under management requirements for a manager to qualify as a QPAM, require that QPAMs register with the DOL, and require that agreements between QPAMs and their clients be amended to include specific indemnity and other provisions.

Source: Lowenstein.com, August 2022

Seventh Circuit Affirms Dismissal of ERISA Stock-Drop Case

Since the Supreme Court's ruling in Fifth Third Bancorp v. Dudenhoeffer, courts around the country have overwhelmingly rejected ERISA fiduciary-breach claims by 401k plan participants seeking relief related to investments in company stock funds. The Seventh Circuit recently continued that trend by affirming the dismissal of claims brought by participants in the Boeing 401k plan but did so on grounds that the fiduciary responsibilities associated with the company stock fund had been delegated to an independent fiduciary, and the insider fiduciaries had no duty to disclose corporate inside information to the plan participants or the independent fiduciary.

Source: Erisapracticecenter.com, August 2022

IRS Extends Deadlines for SECURE and CARES Amendments

The Notice states that the IRS anticipates that additional guidance will appear in the 2023 Required Amendments List, an annual list of changes in retirement plan qualification requirements. As a result, the IRS intends that plan sponsors will be able to adopt all necessary amendments on a single date.

Source: Eversheds-Sutherland.com, August 2022

The Impact of Missing the July 31, 2022, Deadline for Restating Pre-Approved 401k Plans

For the many employers that use a pre-approved 401k plan (or another type of defined contribution plan), the deadline to execute a restatement of the plan was July 31, 2022. An employer that missed the deadline will need to review whether a correction will be required to maintain the plan's favorable tax status and implement any required correction. Depending on the circumstances, some failures may require obtaining formal approval from the IRS through its Voluntary Correction Program, while others may be eligible for self correction.

Source: Benefitslawadvisor.com, August 2022

What Mutual Fund Fee Disparities Mean for Retirement Savings

When employees decide to leave their employer-sponsored retirement plan, either through retirement or a job change, many decide to roll their savings over into an individual retirement account. A recent study suggests that this can be a risky move financially, as IRA owners are more likely to face higher costs over time. According to a Pew issue brief, when an individual moves their savings over into an IRA, thousands of dollars in savings can be lost over time, simply because of differences in fees between funds or between types of shares within a fund.

Source: Planadviser.com, August 2022*

Lawsuit Accuses Fiduciaries of Chasing Low Fees Without Regard to Performance

Microsoft Corporation is the target of a new complaint in a series of lawsuits claiming that the BlackRock LifePath Index Funds suite of 10 target-date funds was an imprudent investment choice for defined contribution plans. The lawsuits accuse the defendants of selecting and retaining "poorly-performing investments instead of offering more prudent alternative investments that were readily available at the time."

Source: Planadviser.com, August 2022

IRS Provides Three-Year Extension for SECURE Act Amendments and Additional Limited Relief

IRS Notice 2022-33 provides extensions to the amendment deadlines for certain provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019, the Bipartisan American Miners Act of 2019, and the Coronavirus Aid, Relief, and Economic Security Act. This Notice comes as welcome relief, albeit limited in some instances.

Source: Groom.com, August 2022

IRS Guidance Extends Deadline for SECURE & CARES Act Amendments

On August 3, 2022, in a welcome and surprising move, the IRS released Notice 2022-33, providing for an extension for qualified retirement plans to adopt amendments under the Setting Every Community Up for Retirement Enhancement Act of 2019, the Bipartisan Miners Act of 2019 (which provided defined benefit plans with an optional reduction in the minimum age for in-service distributions from age 62 to 59 1/2), and the Coronavirus Aid, Relief, and Economic Security Act.

Source: Erisapracticecenter.com, August 2022

IRS Extends SECURE, CARES Act Amendments Deadline

In a bit of good news for plan sponsors, the IRS announced in Notice 2022-33 on August 3, 2022, that it is extending upcoming plan amendment deadlines under the Setting Every Community Up for Retirement Enhancement Act of 2019, the Coronavirus Aid, Relief, and Economic Security Act and the Bipartisan Miners Act of 2019 to December 31, 2025.

Source: Cohenbuckmann.com, August 2022

The IRS Throws a Curveball: How to Knock the New Compliance Pilot Program Out of the Park

Earlier this summer, the IRS surprised the retirement plan world when it announced a new approach for narrowing the universe of plans seemingly worthy of its investigatory and audit resources. If your organization receives a letter under this new program, what will you do? Will you be prepared to respond? What if the answer is no?

Source: Qualifiedplanadvisors.com, August 2022

Complexity of QPAM Proposal Could Be a Concern

The DOL in late July announced a proposed amendment to the Class Prohibited Transaction Exemption 84-14. An attorney calls the objectives of the proposed amendment 'sensible,' but said implications could be 'unexpected and worrying.'

Source: Plansponsor.com, August 2022

Booz Allen Hamilton, Others Face Passive TDF Performance Lawsuits

Unlike many other ERISA lawsuits, the complaints suggest the plan fiduciaries in question should have considered more expensive target-date funds that might have performed better. The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia, naming as defendants Booz Allen Hamilton Inc., the company's board of trustees, and various committees tasked with operating the management and technology consulting firm's defined contribution retirement plan.

Source: Planadviser.com, August 2022

The Most "Outrageous" ERISA Complaints Yet Filed?

One fiduciary insurance expert who has long been tracking ERISA litigation says a spate of new complaints filed in recent weeks are the "most outrageous" the industry has ever seen.

Source: Planadviser.com, August 2022

Swift Settlement for Excessive Fee Suit

Capozzi Adler and Miller Shah have wrested another settlement in an excessive fee suit in record time. This time it's the $1.2 billion Rush University Medical Center 403b plan (which was sued by four former workers just a few months ago) that has agreed to settle for $2.95 million as well as "meaningful non-monetary relief related to the ongoing management and administration of the Plan."

Source: Napa-net.org, August 2022

SEC Warns Firms Not to Neglect Conflicts of Interest

The SEC is warning broker-dealers and investment advisers that they need to take ongoing steps to identify and eliminate conflicts of interest, noting that all firms have them in some form.

Source: Napa-net.org, August 2022

BlackRock TDF Targeted in Another Suit

Claiming that the plan fiduciaries "...employed a fundamentally irrational decision-making process (i.e., inconsistent with their duty of prudence) contrary to basic economics and established investment theory," a new suit involving the BlackRock LifePath target-date funds has been filed.

Source: Napa-net.org, August 2022

Morningstar Urges DOL to Revisit TDF Guidance

While many employers do consider their participants' needs when selecting target-date fund glide paths, a new white paper argues there is too much homogeneity given the heterogeneity of workers' needs. As such, more can be done, say Morningstar Senior Analyst Lia Mitchell and Retirement Studies head Aron Szapiro, who examined the glide paths that plan sponsors use in different sectors and offer recommendations to the Department of Labor.

Source: Asppa.org, August 2022

Record Increases Projected for 2023 Retirement Plan Limits

The announcement of the official limits is still a few months away, but early projections from Mercer suggest that nearly all qualified retirement plan limits will increase by unprecedented amounts next year.

Source: Asppa.org, August 2022

What Plan Sponsors Need to Know About the New 90-Day IRS Preaudit Retirement Pilot Program

The IRS is piloting a new retirement plan compliance program that allows plan sponsors to correct plan defects 90 days before the commencement of an IRS audit. Here's what you need to know.

Source: Sidley.com, August 2022

Cybersecurity Invades Employee Benefit Plan Administration

Cybersecurity is a tech-centric term that often makes business unit leadership's eyes roll. That response is risky because cybersecurity ranks among the most vital issues facing human resources, finance, and administration executives. Employee benefit plan leaders face a new era that requires administration and risk management behaviors that are not part of traditional fiduciary best practice thinking.

Source: Rolandcriss.com, August 2022

Risk Literacy and Why Your Committee Should Consider It

This article offers insight into the complex topic of the various risks DC plan participants face. It also challenges traditional thinking about risk, which often oversimplifies risk as a single category and underestimates the impact various risks have on retirement outcomes. The author believes plan sponsors would do well to deploy time toward "risk literacy" and understand the various risks their participants face as they make critical plan oversight decisions. Risk literacy will help committees prioritize the way they spend time and inform key decision-making.

Source: Planpilot.com, August 2022

Keeping Up With the Securing a Strong Retirement Act

Because different provisions are included in the House and Senate versions of the ambitious retirement reform legislation, a reconciliation process is likely in store.

Source: Planadviser.com, August 2022

Summary of Provisions in the Securing a Strong Retirement Act

Staff on both sides of the Capitol are now working to negotiate a unified, bicameral version of retirement legislation that could potentially be included in a must-pass spending bill later this year. This chart compares the House and Senate bills and identifies differences among the bills.

Source: Groom.com, August 2022

DOL Proposes Amending QPAM Exemption

The DOL recently proposed an amendment to Prohibited Transaction Class Exemption 84-14. The proposed changes would have a material impact on asset managers and benefit plan investors. Comments and requests for a hearing on the Proposed Amendment are due by September 26, 2022. The Proposed Amendment would begin to apply 60 days after the date of final adoption in the Federal Register.

Source: Groom.com, August 2022

DOL Proposes Substantial Amendments to QPAM Exemption

These amendments would significantly impact entities that rely on the QPAM Exemption, as well as plans, plan fiduciaries, counterparties to transactions involving QPAMs, and others. The amendments would impose significant compliance burdens and costs on QPAMs, including the need to amend existing agreements to comply with the conditions. Additionally, the indemnification and hold harmless provisions are likely to increase the potential liabilities of a QPAM that becomes disqualified.

Source: Fiduciarygovernanceblog.com, August 2022

401k Safe Harbor Rules - 2022

A description of the 401k safe harbor rules, updated for 2022, as well as an explanation of the advantages and disadvantages of this plan design option.

Source: Consultrms.com, August 2022

DOL Issues Proposed Amendment to the QPAM Exemption

The DOL announced a proposed amendment to the prohibited transaction class exemption 84-14. The QPAM Exemption is a broad-based class exemption relied upon by many registered investment advisors who manage the assets of pension plans and other employee benefit plans subject to ERISA and other "plans" described in Section 4975 of the Internal Revenue Code. Without the availability of the QPAM Exemption, many investment managers would frequently be precluded from managing the assets of a Plan. The proposed modifications are reviewed here.

Source: Akingump.com, August 2022

Retiring (Much) Later: Average Age Up Big Since 1991

Americans are indeed working longer and retiring later than they used to, with an average retirement age that is four years later than it was in 1991. According to Gallup's annual Economy and Personal Finance survey, conducted each April, the average reported retirement age in the U.S. today is 61, four years older than the same survey found in 1991, when on average people reported they retired at age 57. And notably, the average expected retirement age among non-retirees is now 66, up sharply from 60 in 1995.

Source: 401kspecialistmag.com, August 2022

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