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October 2022 Digest

This digest contains a wide variety of source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k 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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Advisers Turn to Managed Accounts as Demand for Customized Plan Design Options Grows

As demand for customized plan design options continues to grow, plan sponsors are increasingly embracing managed accounts as a solution within their plans. More than a quarter of plan sponsors queried by Fidelity Investments said they were planning to introduce more managed account options into their fund lineup this year. Some plan sponsors are going even further, making managed accounts the qualified default investment alternative for some or all participants. Fully 87% of recordkeepers had managed accounts available on their platform, and another 7% planned to offer them in the next two years, according to Cerulli.

Source: Planadviser.com, October 2022*

Half of Americans Say They're Reducing or Stopping Retirement Savings Due to Inflation

Managing rising inflation is causing 54% of Americans to reduce or stop socking away retirement savings, according to a new survey by Allianz Life. Allianz heard from 1,004 respondents that 43% of them had to dip into retirement savings to meet rising costs. Meanwhile, 75% said they're worried the cost of living will impact their overall retirement plans, according to the September poll.

Source: Planadviser.com, October 2022

Three Things Employees Want Now From Their 401k

A new Mercer report about employee financial stress also revealed some interesting findings concerning what workers think about, and want most from, their 401ks.

Source: 401kspecialistmag.com, October 2022

How Can Fiduciaries Serve Safely in Their Highly Regulated Role?

The DOL has called for increased training for people who occupy the primary position of trust for employer-sponsored retirement plans. While a good heart is a desirable trait in fiduciaries, the DOL stresses the vital role that knowledge plays for executives and managers who typically lack academic or formal education in the prudence principles that dictate fiduciary conduct under ERISA.

Source: Rolandcriss.com, October 2022

2022 Participant Survey

Against a backdrop of rising inflation and global instability, many employees are feeling the pressure of meeting their day-to-day financial needs. That sentiment was evident in the 2022 PLANSPONSOR Participant Survey. This year, 2,301 American workers responded to questions about their financial behaviors, preferences, and attitudes; of this group, 774 full- or part-time employees were counted for being active participants in an employer-sponsored defined contribution plan.

Source: Plansponsor.com, October 2022

IRS Extends Deadline for Plan Amendments Under Certain Provisions of the CARES Act and the Relief Act

On September 26, 2022, the Internal Revenue Service issued Notice 2022-45, extending the deadline to amend eligible retirement plans (including nongovernmental qualified plans and 403b plans and individual retirement arrangements) to reflect relief provided under certain provisions of the Coronavirus Aid, Relief, and Economic Security Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 to December 31, 2025.

Source: Pbwt.com, October 2022

403b Plan Fiduciaries Fend Off Excessive Fee Claims

Yet another excessive fee suit has been dismissed for failing to make a "plausible" case. The plaintiff, in this case, is Kaila Gonzalez, a participant in the Northwell Health 403b Plan, who filed suit against Northwell Health, Inc., the Northwell Health 403b Plan Committee, and 10 other unidentified Plan fiduciaries. She alleged that the defendants here allowed the Plan to be charged excessive recordkeeping fees and imprudently retained certain investment options in the Plan's investment menu in violation of ERISA.

Source: Ntsa-net.org, October 2022

Young Workers Cast Wide Net for Retirement Savings Opportunities

While the 401k remains the top retirement savings vehicle for today's workers overall, Gen Z and Millennial workers are more likely to seek out a wider range of resources, from investment options and vehicles to financial wellness tools and advice. According to Schwab Retirement Plan Services' annual survey of 401k plan participants, unlike older generations, other types of investments are likely to play a greater role in Gen Z and Millennial workers' long-term wealth plans, including investing in cryptocurrency, real estate, annuities, and small businesses.

Source: Napa-net.org, October 2022

Among Higher-Ed, DC Plans Viewed as Top Benefit for Attracting Talent

Findings from a bi-annual survey of retirement plan decision-makers in the higher education sector show that the DC plan is the No. 1 most important benefit for attracting and retaining talent. What's more, 90% also agree that a DC retirement plan helps attract high-quality employees, and 87% agree it helps retain high-quality employees.

Source: Napa-net.org, October 2022

Yale 403b Plaintiffs Move Ahead to Jury Trial

Plaintiffs in one of the first university 403b suits to be filed will get their day in court. The suit against Yale University was one of the first to be filed in this area by Schlichter Bogard & Denton LLP in August 2016. As has been the case with most in this genre, it alleged that employees paid excessive recordkeeping fees in addition to selecting and imprudently retaining funds which the plaintiffs claim have historically underperformed for years.

Source: Napa-net.org, October 2022

Federal Court Orders Company and Its Owner to Repay 401k Plan

A federal court in Illinois has found David Rine and Julieta Mitra, president and owner, respectively, of Home Bound Healthcare, in default after they failed to respond to a complaint the Department of Labor filed on March 31 concerning the company's 401k plan. The court ordered Rine, Mitra and the company to repay $85,402 to the company plan.

Source: Investmentnews.com, October 2022

Court Finds No ERISA Liability for Plan Provider Who Delivered Self-Interested Rollover Advice

A New York federal court recently held that a service provider for employer-sponsored retirement plans was not liable as a fiduciary under ERISA when it used participant information to encourage certain plan participants to roll over assets into its more expensive managed account program.

Source: Erisalitigationadvisor.com, October 2022

Is Cryptocurrency Too Risky for 401k Plans? The Controversy Continues

Regardless of whether the DOL prevails against ForUsAll in the pending lawsuit, cryptocurrency is here to stay. Industry participants can help the DOL develop a more nuanced position about cryptocurrency that takes these differences into account if they are given the opportunity.

Source: Cohenbuckmann.com, October 2022

Can Participants Certify Electronically That They Have a Financial Need for Which a Hardship Distribution Can Be Made?

If you carefully follow a procedure authorized by the IRS in 2017, your plan could elect to have participants provide summaries instead of the source documents that substantiate their immediate and heavy financial needs. This article outlines the procedure and then reviews the rules that led to your current practice.

Source: Thomsonreuters.com, October 2022

401k Errors That Should Require a Plan Provider Change

Change for the sake of change is a bad idea, you need a reason for it. There are certain plan errors where 401k plan sponsors should consider change and that change is a change of their plan providers. Here is a list of 401k errors that should get the plan sponsor to consider making such a change.

Source: Jdsupra.com, October 2022

New ERISA Retirement Plan Court Cases Pending

ERISA class action lawsuits, alleging that plans have charged excessive fees or provided poorly performing investment selections in retirement plans, have continued in recent months. The U.S. Supreme Court's January 2022 ruling in Hughes v. Northwestern University has not stopped the deluge of these filings, even as summer rulings in the Sixth Circuit have potentially narrowed the pleading standards for these types of lawsuits.

Source: Hallbenefitslaw.com, October 2022

What DC Plan Sponsors Should Know About Recent Litigation Trends: Part 1

Callan reviewed 165 lawsuits filed against mid- to mega-sized defined contribution plans ($175 million to $10 billion-plus) between January 2019 and August 2022, to provide an analysis of trends in litigation centered on the fiduciary duties outlined in ERISA. For ERISA litigation, 2020 was a bumper year, with 73 new cases filed. After the U.S. Supreme Court agreed to hear Hughes v. Northwestern in September 2021, the rate of new lawsuits slowed. As a result, 2021 saw only 39 lawsuits. After the decision was issued in January 2022, the rate of litigation resumed. As of August 15, this year has seen 32 new lawsuits.

Source: Callan.com, October 2022

What DC Plan Sponsors Should Know About Recent Litigation Trends: Part 2

Callan reviewed 165 lawsuits filed against mid- to mega-sized DC plans ($175 million to $10 billion-plus) between January 2019 and August 2022, to study trends in DC plan litigation centered on the fiduciary duties outlined in ERISA. The first article on this topic outlined some major findings. This article discusses the four key themes identified in Callan's analysis of these suits.

Source: Callan.com, October 2022

401k Study Finds Millennials and Gen Z Take Advantage of Broader Range of Retirement Resources Than Previous Generations

Young workers are relying on more than their 401ks to save for retirement as other types of investments play a greater role in their long-term wealth plans, according to the annual nationwide survey of 401k plan participants from Schwab Retirement Plan Services. While the 401k remains the top retirement savings vehicle for today's workers overall, Gen Z and Millennial workers are more likely to also invest in cryptocurrency, real estate, annuities, and small businesses, unlike older generations.

Source: Businesswire.com, October 2022

Annuities as Part of Target-Date Funds Grow in Popularity

For plan sponsors considering an in-plan retirement income option, defined contribution plan consultants are most likely (68%) to recommend target-date funds with a guaranteed income component, followed by a TDF with an income vintage (50%), a new report shows. The report from Cerulli Associates finds the target-date options were followed by a managed account (36%), as the next most likely recommendation from defined contribution consultants for in-plan retirement income offerings.

Source: Planadviser.com, October 2022*

Managed Accounts Fraught With Issues for Employers

More employers are adding managed accounts to their workplace retirement plans despite what industry experts say is ambivalence about these products. While employers are looking to help workers achieve a more personalized retirement investment portfolio, they're troubled by what some observers described as a "money grab" by recordkeepers seeking to boost revenues.

Source: Pionline.com, October 2022

Maintaining Plan Documents and Procedures for Retirement Plan Required Minimum Distributions

Various types of tax-qualified retirement plans and individual retirement accounts must pay required minimum distributions to participants at their required beginning date. Retirement plan participants that do not timely obtain the required minimum distributions of their benefits can face excise tax penalties for these failures, and plan sponsors can face plan disqualification. Plan sponsors and fiduciaries should clearly communicate plan rules and update their documents and procedures to ensure that required minimum distributions are timely taken, especially since the rules have changed in recent years.

Source: Mintz.com, October 2022

SECURE 2.0's 403b PEP Rules Will Be, Well, Different

With so much change continuing to be in the air, it seems all too rare to be able to take the opportunity to step back to broadly reflect on all of these moving pieces. The changes from CARES and SECURE, for example, are just working their way through the system, and now we expect to see SECURE 2.0 bring several further changes to the market. 2.0 is fascinating in many ways, especially given that right now it is just a mashing together of three different legislative efforts- plus some.

Source: Businessofbenefits.com, October 2022

How Well Are 401k Advisors Adhering to PTE 2020-02?

Several industry insiders worried that advisors were unprepared for the July 1, 2022, Prohibited Transaction Exemption 2020-02 enforcement deadline. Yet initial results seem to confirm the regulation is working as the DOL intended.

Source: 401kspecialistmag.com, October 2022

401k and Retirement Plan Limits for the Tax Year 2023

On October 21, 2022, the Internal Revenue Service announced that employees in 401k plans will be able to contribute up to $22,500 next year. The IRS announced this and other changes in Notice 2022-55. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2023. Chart and details here.

Source: 401khelpcenter.com, October 2022

The Importance of Maintaining Retirement Beneficiary Forms

A new employee has a variety of forms to complete when hired. One of the most important forms new employees must complete is a beneficiary form for the company's retirement benefit plans. The plan sponsor must provide a beneficiary form to keep on file upon enrolling a new employee in a retirement plan. Plan sponsors should also update or confirm beneficiary information annually.

Source: Watkinsross.com, October 2022

ERISA Section 404(c) Protection: A Refresher for Fiduciaries

Section 404(c) of ERISA relieves fiduciaries from liability for participants' and beneficiaries' investment decisions in participant-directed individual account plans (like 401ks) if four requirements are met. They are reviewed in this article.

Source: Verrill-law.com, October 2022

Invesco DC Study Reveals Majority of Employees Feel Alone in Identifying Best Retirement Strategy

Invesco released findings from a new study exploring employee and employer preferences for generating long-term retirement income. The survey of more than 1,000 retirement plan participants and 100 large plan sponsors uncover concerns about generating long-term retirement income and considerations for bridging the income gap.

Source: Prnewswire.com, October 2022

A Look at Proposed Regulatory Changes to Crypto and Retirement Plans

A bill from earlier this year that seeks to provide comprehensive regulation to digital assets and aims to clarify the way cryptocurrencies are regulated was discussed at a conference hosted by Georgetown's Psaros Center for Financial Markets and Policy. The environment for crypto could change as it becomes more accepted in retirement products.

Source: Plansponsor.com, October 2022

ESG Adoption Slow Among DC Plans

The growth in the number of ESG funds and their assets supports the case for strong investor interest. Nonetheless, participants' interest and the segment's growth aren't reflected in many retirement plans, and the availability of ESG options varies widely among plan types. One factor hindering ESG's adoption is the lack of ESG-focused target-date funds, though several firms are starting to introduce them.

Source: Planadviser.com, October 2022

Empower Managed Account Participants File Suit

A new lawsuit claims that one of the nation's largest recordkeepers designed a program that -- with the help of advisors -- encouraged retirement plan participants to move those savings into a managed account offering "to benefit themselves at participants' expense...."

Source: Napa-net.org, October 2022

Failure to Identify Sound Comparisons Sinks ERISA Fee, Investment Claims in Eighth Circuit

Plaintiffs must plead a "sound basis for comparison -- a meaningful benchmark" to sustain their claims of imprudent investment and excessive fee against a 401k plan, the federal appeals court in St. Louis has held, dismissing a class action lawsuit for breach of fiduciary duties under ERISA. The U.S. Courts of Appeals for the Sixth and Seventh Circuits reached similar conclusions in dismissing cases before them.

Source: Jacksonlewis.com, October 2022

Best Practices for 401k Plan SPDs

To help employers properly administer their 401k plans, Foley & Lardner LLP has been authoring a series of monthly "401k Compliance Check" newsletters. This latest article includes some tips for drafting a best-in-class 401k plan summary plan description.

Source: Foley.com, October 2022

IRS Issues Limited Relief for Certain Required Minimum Distributions That Were Due in 2021, 2022

On October 7, 2022, the IRS issued Notice 2022-53 which grants limited relief concerning certain new requirements for required minimum distributions from qualified plans (including 401k plans). Specifically, the notice provides relief for 401k plans that failed to make RMDs in 2021 or 2022 to beneficiaries under a new 10-year payment rule that came into effect under the SECURE Act and provides related excise tax relief to affected beneficiaries.

Source: Compliancedashboard.net, October 2022

IRS Provides Relief for Certain 2021 and 2022 RMDs

The IRS has addressed criticism of its proposed regulations on required minimum distributions by providing that a final regulation will not be effective before 2023, including a new proposed interpretation requiring certain beneficiaries to take distributions in each of the 10 years following a participant's death, rather than by the end of the tenth year.

Source: Segalco.com, October 2022

Cybersecurity: Insights and Action Steps

Cybercriminals are creative and resourceful and they're not just after bank accounts. Industry experts in a recent webinar cautioned that retirement plans are in their sights as well. This article outlines some concrete steps that can be taken to address and protect retirement plans against cybercrime.

Source: Ntsa-net.org, October 2022

Latest Excessive Fee Target is a MEP

Most of the claims we are familiar with (as was the plaintiffs' attorney), but there were some interesting nuances in the arguments in the latest excessive fee case, which happens to involve a multiple employer plan, or MEP.

Source: Napa-net.org, October 2022

IRS Guidance Signals RMD Rules are Here to Stay

Looking for a 401k for your startup? This article will help you understand everything you need to know about selecting a 401k provider designed to meet a startup's needs.

Source: Graydon.law, October 2022

401ks for Startups: How to Choose the Right Provider

Looking for a 401k for your startup? This article will help you understand everything you need to know about selecting a 401k provider designed to meet a startup's needs.

Source: Forusall.com, October 2022

Growing Number of Courts Rejecting Common ERISA Fee and Investment Claims

In Matousek v. MidAmerican Energy Co., the Eighth Circuit joined the Sixth and Seventh Circuits in affirming the dismissal of ERISA breach of fiduciary duty claims alleging that the plan fiduciaries allowed the plan to pay excessive recordkeeping and administrative fees and offered imprudent investment options.

Source: Erisapracticecenter.com, October 2022

Financial Challenges Prevent Saving for Retirement

Many U.S. workers must grapple with a "financial vortex" of challenges blunting their retirement savings, research shows. The Goldman Sachs Asset Management Retirement Survey and Report find that every generation of respondents -- Gen Z, Millennials, Gen X, and Baby Boomers -- face significant effects, from competing financial priorities to life events, that distract from the ability of many to save for retirement.

Source: Planadviser.com, October 2022*

ERISA Industry Committee Comments in Opposition to New DOL QPAM Rule

The ERISA Industry Committee submitted a comment letter in opposition to a proposed Department of Labor rule that would change the way qualified professional asset managers are regulated. The new rule is opposed by industry participants due to the new ways in which QPAMs can be disqualified, the onerous new contract agreements, and the inadequate transition and winding down periods.

Source: Planadviser.com, October 2022

Two More District Courts Reject ERISA Fee and Performance Claims as Insufficient

Two recent district court decisions add to the growing number of courts granting motions to dismiss putative ERISA class actions challenging defined contribution plan fees and investment performance. These decisions from the Eastern District of New York and the Eastern District of Wisconsin are the latest victories for defendants at the motion to dismiss stage in this arena and come on the heels of multiple similar decisions in the Sixth and Seventh Circuits.

Source: Erisapracticecenter.com, October 2022

Four Generations of Workers Are Preparing for Retirement Amid an Uncertain Future

Seventy-six percent of workers say their life priorities changed as a result of the pandemic and 56 percent cite saving for retirement as a financial priority, according to Emerging From the COVID-19 Pandemic: Four Generations Prepare for Retirement, a survey report released by the nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute.

Source: Transamericainstitute.org, October 2022

Providing Meaningful Access to, and Features in, Retirement Savings Plans to Address Savings Gaps and Boost Retirement Savings

Mintz Of Counsel Michelle Capezza authored this chapter in New York University's Review of Employee Benefits and Executive Compensation examining some of the ways that employers can provide their employees with meaningful access to retirement savings plans to address retirement savings gaps.

Source: Mintz.com, October 2022

Cybersecurity Breach Suits Raise Questions About Liability for Benefits Plans

Cybersecurity breaches concerning workers' personal information and retirement savings have increased liability risks for benefit plans and third-party administrators under federal benefits laws. In February 2021, the GAO issued a report warning about these increased legal risks for ERISA plan fiduciaries due to cyber breaches. The GAO also warned that outsourcing various functions involving retirement plans to third-party administrators could increase the potential for unauthorized access to participants' information. In recent years, the GAO's warnings have become a reality.

Source: Hallbenefitslaw.com, October 2022

Is It Time for ERISA to Be Amended to Cover Cyber Crimes?

It is no surprise that cyberattacks are a grave concern for sponsors of retirement plans. Under ERISA fiduciaries and persons handling funds must be bonded to protect against fraud and dishonesty. This article discusses this required ERISA bond and the interplay of other types of insurance coverage and concludes with a recommendation that Congress amend ERISA to require insurance to address cyber crimes.

Source: Foxrothschild.com, October 2022

Common Myths of Cyber Insurance for Employee Benefit Plans

Cyber insurance is a critical component of the cyber security risk management program necessary to protect employee benefit plans and participant retirement assets. But the current way plan fiduciaries seek cyber and crime coverage needs to change and this article explains why.

Source: Euclidspecialty.com, October 2022

Canada's Retirement System Remains Strong, but DC Pension Plans Facing Inflation Risks: Report

While Canada's pension system continues to rank well globally, the current economic environment poses particular risks for defined contribution pension plan sponsors and members, according to a new report by the CFA Institute and Mercer.

Source: Benefitscanada.com, October 2022

IRS Issues Update on Required Minimum Distribution Rule

The IRS has issued Notice 2022-53, providing guidance on final regulations related to required minimum distributions under section 401(a)(9) of the Internal Revenue Code that will apply no earlier than the 2023 distribution calendar year. The notice also provides guidance related to certain provisions of section 401(a)(9) that apply for 2021 and 2022.

Source: Planadviser.com, October 2022

ERISA Suit Brought Against Quanta Services

Two former employees of Quanta Services in late September brought a class action suit against the company under the Employee Retirement Income Security Act, alleging that Quanta had maintained underperforming and expensive investment options in its sponsored retirement plan. Quanta Services, an electrical power company, sponsored a retirement plan that covered 16,317 participants, with $1.21 billion in assets as of December 21, 2020, according to the lawsuit.

Source: Planadviser.com, October 2022

IRS Extends Helpful RMD Rule Transition Relief

In recognition that RMDs may not have been made in 2022 in compliance with the Proposed Rule, or in 2021 consistent with what the IRS would consider a good faith interpretation of the SECURE Act, the IRS issued Notice 2022-53 to provide transition relief for 2021 and 2022. Additionally, Notice 2022-53 states that the final RMD rule will not apply to RMDs any earlier than 2023.

Source: Icemiller.com, October 2022

DOL Regulations Expand Liability for Financial Advisors Giving Pension Rollover Advice

The DOL began fully enforcing its Prohibited Transaction Exemption 2020-02 as of July 1, 2022. These regulations apply to and expand liability for financial advisors giving clients pension rollover advice. Some aspects of the rule were already in effect. Still, advisors must now provide clients with a mandatory written explanation of why the investment professional or financial institution believes the rollover is in the client's best interest. Financial institutions must adopt policies and procedures to ensure compliance with the Impartial Conduct Standards and mitigate conflicts of interest.

Source: Hallbenefitslaw.com, October 2022

IRS Extends Deadline to Amend Plans for Additional Cares Act, CAA Disaster Relief Provisions

On September 26, 2022, the IRS issued Notice 2022-45 which extends the deadline for amending retirement plans, including 401k plans, to comply with recent legislation. The applicable legislative provisions, which have now expired, were enacted as part of a wider effort to provide temporary relief in response to the global COVID-19 pandemic, and generally require plan documents to be amended, as further explained below.

Source: Compliancedashboard.net, October 2022

IRS Extends More Retirement Plan Amendment Deadlines

The IRS announced on September 26, 2022, that it would extend the deadline for amending retirement plans or IRAs to reflect coronavirus-related distributions and certain qualified disaster distributions. Notice 2022-45 extends the deadline by three years, generally to December 31, 2025. The deadline extension also applies to retirement plans that allowed expanded participant plan loans during 2020.

Source: Bdo.com, October 2022

In Cybersecurity Enforcement Action, Seventh Circuit Rejects Service Provider's Challenges to DOL Subpoena

In an enforcement action involving an administrative subpoena seeking documents from a service provider for employer-sponsored health and retirement plans, the Seventh Circuit held that the DOL's investigatory authority under ERISA is not limited to ERISA plan fiduciaries. The Seventh Circuit also concluded that the subpoena was not too indefinite or unduly burdensome.

Source: Westlaw.com, October 2022*

Insurer the Target of an ERISA Lawsuit

Retirement plan participants have brought a class action lawsuit against Mutual of America Life Insurance Company for an alleged breach of fiduciary duty under ERISA. Plaintiffs have alleged Mutual of America 401k plan fiduciaries breached its fiduciary duties of loyalty and prudence to participants by selecting a proprietary, closed architecture recordkeeping platform and for failing to monitor or control the plan's administrative expenses, the complaint states.

Source: Planadviser.com, October 2022

ERISA Lawsuit Against Associated Bank Dismissed

A federal judge has dismissed a lawsuit seeking class action certification against fiduciaries of the Associated-Banc Corp. 401k and employee stock ownership plan. Plaintiffs alleged plan fiduciaries engaged in self-dealing and retained proprietary investments that underperformed their benchmarks.

Source: Planadviser.com, October 2022

Retirement Plan Sponsors Have Short 2022 Year-End Amendment List

With IRS recently extending several plan amendment deadlines, retirement plan sponsors now have few (if any) plan amendments to adopt before 2022 draws to a close.

Source: Mercer.com, October 2022

DOL Set to Finalize ESG Rule for Retirement Plans

The DOL has effectively finished its ESG rule for retirement plans and sent it to the White House Thursday for final approval. The final version of that rule, which has been in the works since last year, likely will not be published until next month.

Source: Investmentnews.com, October 2022

Auto-Portability: A Guide for Retirement Plan Sponsors

This Q&A is geared toward plan sponsors who are curious about the auto-portability process and how it might prove beneficial to their plan participants. Auto-portability can prove especially useful in industries with lower wages and high employee turnover, which may include retail, transportation, hospitality, and restaurants because this can often lead to numerous account balances of $5,000 or less being involuntarily rolled to default IRAs.

Source: Eforerisa.com, October 2022

IRS Notice 2022-53: Certain Required Minimum Distributions for 2021 and 2022

This notice announces that the Internal Revenue Service intends to issue final regulations related to required minimum distributions under section 401(a)(9) of the Internal Revenue Code that will apply no earlier than the 2023 distribution calendar year. In addition, this notice provides guidance related to certain provisions of section 401(a)(9) that apply for 2021 and 2022.

Source: Irs.gov, October 2022

The SEC Is 'Coming After' RIAs That Fail to Track Client Chats by Text, Whatsapp, and Social Media, Experts Say

The smartphone's advance took life one giant step forward for RIAs, but they can't fight the law of unintended consequences and it may already have won. Smartphones make our business and personal lives porously one. Yet from the SEC's perspective, no such blurred line exists, and every mobile chat with a client pertaining at all to business is subject to compliance.

Source: Riabiz.com, October 2022

New Bill Seeks to Encourage 401k Investment in Alternative Assets

The Retirement Savings Modernization Act aims to clarify ERISA to incentivize retirement investment in assets such as real estate, private equity, and cryptocurrencies.

Source: Planadviser.com, October 2022

House Approves Bill Banning Arbitration Clauses in ERISA Plans

Shortly before recessing for the mid-term elections, the House of Representatives approved legislation that would prohibit arbitration and discretionary clauses in employer-sponsored benefit plans under ERISA. The proposed changes were passed as part of the Mental Health Matters Act (H.R. 7780), which the House approved on Sept. 29.

Source: Napa-net.org, October 2022

Stable Fund Focus in Another Excessive Fee Suit

The latest excessive fee suit targets "wildly excessive compensation," an allegedly imprudent stable value offering, and the unmonitored use of "float" income. More specifically, the participant-plaintiffs of Miami, Florida-based Lennar Corp. are raising issues with the recordkeeping/administrative fees paid by the plan, the prudence of retaining Prudential's stable value fund, and the use of float income by Prudential (the plan's recordkeeper).

Source: Napa-net.org, October 2022

Two District Courts in the Seventh Circuit Grapple with Pleading Standards in ERISA Excessive Fee Cases

In Baumeister v. Exelon and Coyer v. Univar Sols. USA Inc., two Illinois district courts became the first courts in the Seventh Circuit to rule on motions to dismiss ERISA fee and investment claims following the Seventh Circuit's ruling in Albert v. Oshkosh, which affirmed the dismissal of similar ERISA claims. In a familiar slate of allegations, plaintiffs in both cases claimed that plan fiduciaries breached their fiduciary duties under ERISA by permitting their respective plans to pay excessive recordkeeping fees.

Source: Erisapracticecenter.com, October 2022

Why Plan Sponsors Should Allow Independent Fiduciaries to Manage Employer Stock in Retirement Plans

The biggest value to using an independent fiduciary in this context is that it dramatically increases the likelihood that a plan fiduciary, sued for the drop in value of employer stock held by employees in a benefit plan, can end the case at the motion to dismiss stage. Author reviews why this is.

Source: Bostonerisalaw.com, October 2022

Four Ways an Independent Recordkeeper Benefits an Advisor

Advisors have a primary choice between partnering with companies who sell insurance or investments and offer 401k plans as part of their financial services lineup and independent recordkeepers who tend to be local or regional specialists who focus on actively collaborating with financial and tax advisors to design and operate retirement plans tailored to their clients. This piece reviews four ways an independent recordkeeper can help you grow your retirement plan practice.

Source: Abgnational.com, October 2022

Economy Forcing Cutbacks in 401k Contributions: Morgan Stanley

Because of the economic impacts related to inflation and/or concerns about a recession, 62% of employees report that they've needed to reduce contributions to their savings, with nearly a third (31%) reducing contributions to their 401k plans. That's a key finding from the latest research released today from Morgan Stanley at Work's second annual State of the Workplace Financial Benefits Study.

Source: 401kspecialistmag.com, October 2022

IRS Extends Time to Amend Retirement Plans

The IRS has extended the deadlines by which retirement plans must be amended to comply with provisions in several laws passed in the last few years. No amendment for the covered provisions will be required before December 31, 2025. In addition, the IRS is extending anti-cutback relief for most, but not all, of these amendments.

Source: Segalco.com, October 2022

PSCA Releases 2022 403b Survey

As employers everywhere continue to recover from the long-term impacts of the COVID-19 pandemic and compete for talent, employer contribution rates to 403b plans rose almost 24% year-over-year from 4.6% in 2020 to 5.7% of gross annual pay in 2021, according to an annual 403b Plan Survey from the Plan Sponsor Council of America, part of the American Retirement Association.

Source: Psca.org, October 2022

Evolution of the QDIA. Is Your Plan Due for a Review?

A QDIA review can be looked at as a gateway for your plan committee to clarify plan objectives. This article encourages plan sponsors to lift their heads and consider (or reconsider as the case may be) if your committee is due for a deeper look at your QDIA given marketplace evolution and changing plan needs.

Source: Planpilot.com, October 2022

Retirement Experts Identify Possible Fixes to the Retirement Savings Gap

Professionals invited by the IAA discuss obstacles to retirement savings, and what can be -- and has been --done about them. Opt-out policies are the best way to increase retirement plan enrollment, according to the retirement experts.

Source: Planadviser.com, October 2022

IRS Extends More Retirement Plan Amendment Deadlines

Newly released IRS Notice 2022-45 extends the plan amendment deadline for provisions of the CARES Act that allowed retirement plan sponsors to offer special penalty-free distributions, set a higher plan loan cap, and suspend loan repayments for participants affected by the COVID-19 pandemic. The extension also applies to provisions of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 that allowed penalty-free distributions to participants affected by certain disasters.

Source: Mercer.com, October 2022

Fiduciary Status for Rollovers Not a Given and New Developments in Uses of Plan-Related Data Under ERISA

A September 27, 2022, decision by the Southern District of New York addresses several key theories recently advanced by the plaintiffs' bar in ERISA-based lawsuits against plan service providers. The Court also rejected fiduciary liability claims concerning alleged uses of plan information available to the Provider in its plan service provider role. The decision includes a reasoned analysis of the DOL's "shifting perspective" on defining investment advice fiduciaries under ERISA.

Source: Groom.com, October 2022

Searching for Solutions to Participant Account Theft When the Recordkeeper Disclaims Liability

Most of us have heard that a plan participant in the Colgate-Palmolive 401k plan suffered a cyber theft of her entire account balance, and sued the plan fiduciaries, the recordkeeper, and the bank custodian, all three of which are disclaiming fiduciary liability. There has to be a better answer than saying "I’m sorry" to a plan participant who has lost his entire account balance. This article explores these issues after a summary of the case and the positions of each defendant in their respective motions to dismiss.

Source: Euclidspecialty.com, October 2022

Eighth Circuit Holds Principal Did Not Breach Its Fiduciary Duty to 401k Plan Participants

The U.S. Court of Appeals for the Eighth Circuit recently affirmed a District Court's finding that Principal Life Insurance Company did not breach its fiduciary duties regarding its stable value contract for 401k plans.

Source: Erisalitigationadvisor.com, October 2022

Safe-Harbor Leveraging for Small Business, Top-Heavy Retirement Plans - 2022

Many employers are debating how to most efficiently take advantage of the defined contribution limit increase to $61,000. However, few owners of small businesses are aware of the extent to which certain types of "leveraging" are now permitted in qualified retirement plans. The purpose of this article is to illustrate the provisions that allow owners of small businesses to get the most in return for what they are willing to contribute on behalf of their non-owner employees.

Source: Consultrms.com, October 2022

Financial Wellness: Is It the Right Prescription for Your DC Plan?

Employee benefits offerings are generally subject to inertia, change comes slowly and the effort to deploy new or revised benefits may be daunting to employers and confusing to participants. But the pandemic, the "Great Resignation," and significant legislative interventions have changed that dramatically. This combination of forces has made the topic of "financial wellness" and its deployment more timely and important. This article reviews the scope of financial wellness as an employee benefit, its utilization, its evolving capabilities, and the risks that these expanded services and tools could pose to employers and fiduciaries.

Source: Callan.com, October 2022

Retirement Plan Notice Delivery Requirements

Providing your employees and plan participants timely access to retirement plan documents is required by law. In May 2020, the DOL finally agreed the internet is here to stay and, at long last, has made it easier to fulfill that requirement electronically. With the rise in technology and the use of electronic devices, the DOL has learned to appreciate the benefits that come with recognizing electronic delivery as an acceptable medium for communicating these required documents to employees. Regardless of delivery method, Plan administrators must still take measures to reasonably ensure the confidentiality of personal information is protected, the documents are received and reviewed, and the process remains free of charge to the participant.

Source: Benefit-Resources.com, October 2022

CalSavers Program Expanding for Small Employers

CalSavers currently applies to eligible employers with five or more employees. As amended by S.B. 1126, CalSavers will expand to eligible employers with one or more eligible employees by December 31, 2025. Accordingly, California employers with less than five employees may need to carefully consider the questions outlined here.

Source: Swlaw.com, October 2022

Extended CARES and SECURE Act Plan Amendment Deadline

The IRS has now issued Notice 2022-45, which extends the plan amendment deadline for the optional CARES Act provisions that were not addressed by the previous extension. As a result, all changes under the CARES Act, Miners Act, and SECURE Act have the same plan amendment deadlines of December 31, 2025.

Source: Spencerfane.com, October 2022

Home Depot Victorious in ERISA Suit

A federal judge for the U.S. District Court for the Northern District of Georgia ruled in Home Depot's favor in an ERISA lawsuit last Friday. Plaintiffs Jaime Pizarro and Craig Smith brought the class action lawsuit in April 2018. They alleged that Home Depot offered imprudent investment options for their retirement plans and failed to monitor their performance in violation of ERISA over a class period beginning in April 2012.

Source: Planadviser.com, October 2022

TIAA Prevails in Rollover Recommendation Suit

A case involving allegations of a fiduciary breach related to a rollover recommendation provides some interesting perspectives on several operational issues. The variety of claims notwithstanding, Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York said it was "predicated in large measure on the Court finding that Defendants were not ERISA fiduciaries during the relevant timeframe."

Source: Napa-net.org, October 2022

Most Americans Financially Unable to Retire at 65

Yet another study has found the majority of retirees and pre-retirees are not financially prepared for retirement and lack sufficient savings to fully retire at age 65. Retirement solutions provider Finance of America Reverse today announced the release of "Disconnected: Perceptions vs. Reality in Retirement Planning," a new study from the Stanford Center on Longevity that examines the challenges and concerns facing retirees and pre-retirees as they plan for retirement.

Source: 401kspecialistmag.com, October 2022

Rash of Recent Lawsuits Focus on BlackRock Indexed Target-Date Options: Even Low-Cost Funds Are Being Attacked

Over the past several weeks, a single law firm, Miller Shah, LLP, has filed nearly a dozen lawsuits against fiduciaries of defined contribution plans that offer the BlackRock LifePath Index target date funds. The cases represent a shift in approach relative to earlier waves of ERISA litigation.

Source: Truckerhuss.com, October 2022*

Limited Plan Audits Are History: What 401k Plan Sponsors Should Know

Two types of 401k plan audits exist, limited and full-scope audits. In a limited scope audit, an independent auditor does not have to audit any plan asset information if a bank, an insurance company, or a regulated trust company holds the 401k plan's assets. Limited scope audits are changing and plan sponsors should understand how these changes impact their 401k plans.

Source: Sequoia.com, October 2022

ERISA Self-Dealing Lawsuit Targets Wells Fargo and Ex-CEO Sloan

Plaintiffs have brought an Employee Retirement Income Security Act lawsuit seeking class certification against Wells Fargo, former CEO Tim Sloan, GreatBanc Trust Company, and the employee benefits review committee for alleged breaches of fiduciary duty to participants saving for retirement in the Wells Fargo 401k and employee stock ownership plans. The lawsuit, filed in the U.S. District Court for the District of Minnesota, alleges that Wells Fargo 401k plan fiduciaries engaged in "corporate self-dealing at the expense of the retirement savings of company employees."

Source: Plansponsor.com, October 2022

Retirement Income Is Front and Center. Should Your Committee Consider the Pursuit?

Retirement income services and solutions have remained an overarching theme in the DC space for many years, yet to date, implementation and traction have remained limited. The need to help plan participants translate retirement savings into income is real and well understood. In equal form, the layers of complexity and variation in approaches have influenced the tepid pace of adoption thus far. This article offers a backdrop of complicating factors, summarizes key retirement service and solution concepts, and provides suggested activities for plan sponsor consideration.

Source: Planpilot.com, October 2022

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