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November 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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DOL Proposes Updates to the Voluntary Fiduciary Correction Program

The DOL proposes what it calls a "Self-Correction Component" concerning delinquent participant contributions and loan repayments, subject to several conditions discussed below. It is important to note that the self-correction contemplated by the VFCP update differs from the self-correction afforded under EPCRS because it would still require a submission to the DOL, albeit a streamlined one.

Source: Wagnerlawgroup.com, November 2022

Judge Dismisses Charge of "Unreasonable" 401k Fees by Electronics-Maker Ricoh

A federal district court bounced two fiduciary breach claims brought by participants against Ricoh USA, saying plaintiffs failed "to plausibly allege the committee breached its ERISA-imposed fiduciary duty by charging unreasonable recordkeeping fees."

Source: Planadviser.com, November 2022

2023 US Defined Contribution Plan Compliance Calendar

For calendar-year defined contribution plans, this retirement plan compliance calendar list key IRS, Pension Benefit Guaranty Corp., and Labor Department reporting and disclosure deadlines.

Source: Mercer.com, November 2022

Retirement Benefits Nearly as Important as Salary, Survey Finds

The COVID-19 pandemic thrust retirement savings into the limelight as workers looked for ways to secure financial stability during uncertain times.

Source: Hrdive.com, November 2022

401k Plan Asset Allocation, Account Balances, and Loan Activity in 2020

Key Findings: 401k plans draw in many young retirement savers and new hires. Younger 401k plan participants tend to be invested more in equities than older 401k plan participants. Ownership of investments in equities is widespread among 401k plan participants. Target date funds continue to be an often-used investment option among 401k plan participants. 401k plan loans are widely available but rarely taken. The average 401k plan account balance tends to increase with participant age and tenure.

Source: Ebri.org, November 2022

Are Retirement Plans Too Complicated and at Risk of Becoming Even More So?

Albert Feuer, who writes frequently on the technical aspects of ERISA compliance, has published an interesting new article in Bloomberg Tax's Tax Management Compensation Planning Journal on the latest proposed legislation to alter retirement savings. Albert points out that the changes would help in allowing employees to increase their retirement savings, but would fail to either address the complexity of the system or the extent to which it allows a small percentage of taxpayers to use retirement accounts to shelter massive amounts of wealth far beyond that needed to fund retirement.

Source: Bostonerisalaw.com, November 2022

PODCAST: DOL's Cybersecurity Guidance for Retirement Plans

On April 14, 2022, the Department of Labor outlined a range of practices for combatting the growing threat of cybercrime to ERISA-covered retirement plans. Co-hosts Beth Garner and Joanne Szupka sit down with Greg Schu, Partner, Cybersecurity - National PCI Compliance Lead, BDO Digital, to discuss the implications of guidelines and what steps plan sponsors can take to help safeguard plan assets and participants' vital information.

Source: Bdo.com, November 2022

DOL Proposes Adding Self-Correction Component to VFCP

The DOL proposed updates to the voluntary fiduciary correction program, including a provision that should help plan sponsors and providers. More specifically, the addition of a self-correction component for employers that fail to send employee salary withholding contributions or participant loan repayments to retirement plans on time.

Source: Asppa.org, November 2022

ARA Presses DOL for Changes to QPAM Exemption Proposal

The American Retirement Association is calling on the Department of Labor to make changes to its proposed amendments to the Qualified Professional Asset Manager exemption, arguing that, as currently drafted, the proposal would needlessly disrupt plan relationships and increase costs.

Source: Asppa.org, November 2022

Younger 401k Participants Favor Investment in Equities

Younger 401k plan participants tend to favor equity investing more than older participants. That's a key finding from a new joint study from EBRI and ICI which found that at year-end 2020, 42% of 401k plan participants' account balances were invested in equity funds, on average, in line with recent years. Another 35% of 401k participants' account balances were invested in balanced funds, largely target-date funds.

Source: 401kspecialistmag.com, November 2022

DOL Proposes Changes to the Voluntary Fiduciary Correction Program and Related Prohibited Transaction Exemption

On November 18, 2022, the DOL issued proposed amendments to the Voluntary Fiduciary Correction Program and Prohibited Transaction Exemption 2002-51. The VFCP provides relief from civil liability and an exemption from excise taxes under the Internal Revenue Code to employee benefit plan fiduciaries if they voluntarily report and correct certain transactions that breach their fiduciary duty under ERISA.

Source: Westlaw.com, November 2022*

DOL Proposes Self-Correction of Delinquent Contributions and Loan Payments Under Qualified Retirement Plans

Self-corrections would be allowed for certain low-level delinquent participant contributions, which is significant since delinquent participant contributions are the most common problem corrected through the VFCP.

Source: Sidley.com, November 2022

DOL Final Rule Embraces Principles-Based Approach to ESG Factors in Investments and Proxy Voting: Initial Reactions

Here is a high-level overview of the Final Rule, which includes the key changes the DOL has made from the proposal. Notwithstanding the changes, the Final Rule retains the DOL's core principle that the duties of prudence and loyalty require ERISA plan fiduciaries to focus on relevant risk-return factors and not subordinate the interests of participants and beneficiaries (such as by sacrificing investment returns or taking on additional investment risk) to objectives unrelated to the provision of benefits under the plan.

Source: Ropesgray.com, November 2022

Year-End Compliance Issues for Single-employer DB and DC Retirement Plans

By year-end 2022, sponsors of calendar-year single-employer retirement plans must adopt necessary and discretionary plan amendments to ensure compliance with statutory and regulatory requirements of ERISA and the tax code. This piece looks at key areas, including administrative compliance issues, that DB and DC plan sponsors should address by December 31, 2022.

Source: Milliman.com, November 2022

DOL Adopts Final Rule Allowing Fiduciaries to Consider ESG Factors for ERISA Plans

The DOL adopted a final rule allowing ERISA plan fiduciaries to consider environmental, social, and governance factors when selecting investments and exercising certain shareholder rights.

Source: Findknowdo.com, November 2022

401k Annual Administration - A Checklist for Business Owners

Annual 401k administration shouldn't be stressful or time-consuming for employers. A qualified 401k provider will do most of the heavy lifting by completing the many technical tasks, making the employer's role simple. Employers should use a checklist like the one provided here to ensure their 401k plan's annual administration tasks are completed on time. A 401k administration checklist can also help employers monitor their plan provider's job performance.

Source: Employeefiduciary.com, November 2022

New Determination Letter Program for 403b Plans

The IRS recently issued Revenue Procedure 2022-40, which permits the submission of determination letter applications for individually designed 403b plans used by certain public schools, churches, and charities. Beginning June 1, 2023, plan sponsors maintaining individually designed 403b plans will be able to request a determination letter for initial plan qualification, upon plan termination, or for other limited circumstances to be announced by the IRS.

Source: Buck.com, November 2022

Judge Recommends Dropping Most of $4.2B Retirement Plan Suit Against Nestle

A U.S. District Court federal magistrate judge in the Eastern District of Wisconsin mostly sided with Nestle USA Inc. on Monday in recommending the dismissal of a class action lawsuit alleging fiduciary negligence and self-dealing in Nestle's $4.2 billion 401k savings plan but left room for two charges to be amended and refiled.

Source: Planadviser.com, November 2022

DOL Rule Greenlights ESG, but Questions Remain

The DOL published the final rule on ESG investment in ERISA-governed plans Tuesday, solidifying long-awaited permission to use environmental, social, and governance analysis in retirement investing, but not making it mandatory. Even as the decision came down, however, there are still details to be worked out for real-world implementation, according to multiple ERISA attorneys.

Source: Planadviser.com, November 2022

Share Class Choice Criticized in 401k Excessive Fee Suit

For the fourth month in a row, a relative newcomer to excessive fee litigation has brought suit against a multi-billion-dollar 401k plan. The allegations are familiar -- that the fiduciary defendants breached their duties under ERISA by "selecting and retaining imprudent share classes and investments for the plan" -- in this case the $2 billion Old Dominion 401k Retirement Plan and on behalf of its 24,000+ participants.

Source: Napa-net.org, November 2022

Loans and Hardship Withdrawals From 401ks on the Rise

More Americans are tapping their 401ks for financial emergencies, with the percentage of retirement savers pulling money for hardships spiking 24% in the 12 months through Sept. 30, according to new data.

Source: Investmentnews.com, November 2022

ERISA Fee Complaint Dismissed in Pennsylvania District Court, Extending Favorable Trend

In Krutchen v. Ricoh USA, a Pennsylvania district court dismissed an ERISA excessive fee complaint for failing to provide enough information about alleged comparator plans that allegedly paid less for recordkeeping services. The decision is notable for delivering defendants a victory in the Third Circuit, which previously allowed excessive recordkeeping claims to survive dismissal, and for citing favorably to recent defendant-friendly opinions from the Sixth, Seventh, and Eighth Circuits.

Source: Erisapracticecenter.com, November 2022

DOL Releases Final ESG Rule

On November 22, the DOL released its final rule designed to clarify a path forward for retirement plan fiduciaries wishing to incorporate environmental, social, and governance factors into their investment selection and monitoring process.

Source: Captrust.com, November 2022

ESG Rule Reactions Rolling In

Comments on the Department of Labor's final ESG rule keep rolling in. Early responses on the final rule have been overwhelmingly positive, with many praising the DOL for allowing retirement plan fiduciaries to consider climate change and environmental, social, and governance factors. Large organizations continued to voice their approval as many processed the final rule.

Source: 401kspecialistmag.com, November 2022

Plan Advisers Value Trustworthiness, Personal Touch From DC Recordkeepers

Retirement plan advisers value trustworthiness, reliability, and customer service when it comes to working with DC recordkeepers, according to the results of an annual survey by Cogent Syndicated. Among the key drivers of how retirement plan advisers valued a DC plan provider was having a human representative to support them and consistent and reliable service for themselves as well as their plan sponsors and participants.

Source: Planadviser.com, November 2022

DOL Finalizes Rule Opening Door to ESG Investing in Retirement Plans

The DOL announced a final rule that retirement plan fiduciaries can consider climate change and other environmental, social, and governance factors when they select investments for retirement plans like 401ks, reversing a rule enacted under former President Donald Trump that restricted ESG offerings.

Source: Planadviser.com, November 2022

What's Shaping the U.S. Retirement Landscape in 2023?

A new T. Rowe Price U.S. retirement market outlook examines three broad trends the firm expects to continue to shape the retirement outlook for millions of Americans who are saving and investing for retirement.

Source: Napa-net.org, November 2022

Fiduciaries May, But Not Must Consider ESG: DOL

The DOL has unveiled its much-anticipated final ESG rule that it says will allow "plan fiduciaries to consider climate change and other environmental, social and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting." The operative word for plan fiduciaries is may, not must consider ESG factors, a concern that had arisen in the wake of the proposed regulation previously issued.

Source: Napa-net.org, November 2022

Strange Things That 401k Plan Sponsors Should Be Aware Of

Here are some strange things that go on in the retirement plan business that plan sponsors need to be aware of.

Source: Jdsupra.com, November 2022

DOL Proposes Self-correction for Retirement Contribution Mistakes

The program would enable employers and other plan officials to notify the DOL that they have self-corrected certain failures to send employee salary withholding contributions or participant loan repayments to retirement plans on time, according to a statement from the agency.

Source: Hrdive.com, November 2022

ICI Defends Revenue Sharing and Higher-Fee Share Classes in the Tenth Circuit Barrick Gold Case

The Barrick Gold case is noteworthy because the Investment Company Institute filed an amicus brief in which they defend the use of revenue sharing and actively managed investment options. The article's author thinks it is the best argument they have seen explaining how rampant excessive fee litigation is causing plan fiduciaries to limit their investment choices in retirement plans by avoiding investments with higher potential returns because of the fear of litigation. ICI argues that defensive investment selection will harm participant outcomes.

Source: Euclidspecialty.com, November 2022

IRS Expands Determination Letter Process for Certain Individually Designed 401k Plans

On November 7, 2022, the IRS released Revenue Procedure 2022-40 which generally updates the determination letter submission process for qualified retirement plans, including 401k plans. In particular, among other changes, the program expands the eligibility for requesting determination letters for certain individually designed plans, extends the "remedial amendment period" for certain new plans, and revises the scope of IRS review generally applicable to the determination letter process.

Source: Compliancedashboard.net, November 2022

Today's Retirement Plan Advisories Require Specialization

An evolving small business market, increased regulation, and shifts in client needs all lead to more specialized retirement plan advisement, according to a panel held by American College.

Source: Planadviser.com, November 2022*

What Deadlines Apply to 403b Plans

Whether you are a school business official or a human resources employee of a nonprofit organization, chances are that you are juggling so many responsibilities that your time is at a premium. Knowing deadlines for amending your employer's 403b plan document helps keeps that plan compliant. Here is a good review.

Source: Ntsa-net.org, November 2022

DOL Proposes Adding Self-Correction Component to VFCP

On November 18, the DOL proposed updates to the voluntary fiduciary correction program, including a provision that should help plan sponsors and providers More specifically, the addition of a self-correction component for employers that fail to send employee salary withholding contributions or participant loan repayments to retirement plans promptly.

Source: Ntsa-net.org, November 2022

IRS Signals Employers Will Have Less Discretion Over Discretionary Match

Employers offering discretionary matching contributions have less discretion to set the terms of those contributions outside of plan documents. The IRS recently noted that 403b plan documents submitted for preapproval must include provisions on the computation period and allocation formula for a discretionary match. This likely means that going forward, all employers using preapproved documents for their defined contribution plans -- 403b and qualified plans -- should expect to specify these terms in newly adopted documents.

Source: Mercer.com, November 2022

New 403b Plan Determination Letter Program

Continuing a recent trend to more closely align 403b plans with tax-qualified 401k plans, the IRS recently issued Revenue Procedure 2022-40 to create a limited determination letter program for individually designed 403b plans. For the first time, 403b plan sponsors can request an IRS determination letter for their "individually designed" 403b plans on initial plan qualification, on plan termination, or in other limited circumstances to be established by the IRS.

Source: Groom.com, November 2022

Participants Admit Auto-Enrollment Kickstarts the Retirement Savings Journey

As more employees ask for retirement planning vehicles in their employer-sponsored plans, a Principal study finds automatic features help participants achieve their largest share of retirement income. The latest research from Principal shows that over half (51%) of 725 respondents attributed auto-enrollment to kickstarting their retirement savings journey, and 81% said it helped them begin saving even sooner.

Source: 401kspecialistmag.com, November 2022

Fidelity 401k Balances Drop 23%, But Default Savings Hold

Recent market volatility contributed to at least a 21% drop in the average retirement account over the last year among 35 million of Fidelity Investment's retirement plans. The average retirement account balance for 401k plans dropped 23% from $126,100 at the end of the third quarter in 2021 to $97,200 in Q3 2022, Boston-based Fidelity said in a quarterly view into participant activity. Individual retirement accounts fell 25% to $101,900, and 403b balances were down 21% to an average of $87,400.

Source: Plansponsor.com, November 2022

DOL Rejects ForUsAll's "Tactical Retreat" in Crypto Retirement Case

The DOL is fighting back against the latest move by retirement provider ForUsAll in an ongoing dispute over DOL guidance. The DOL shot back at 401k provider ForUsAll's offer to drop its suit if the court confirmed a DOL warning about crypto in a retirement plan as "not binding."

Source: Planadviser.com, November 2022

Proposed Settlement Would Cost Juniper Networks $3 million

Juniper Networks, Inc. has agreed with plaintiffs to settle for $3 million in a lawsuit brought in August 2021 under ERISA. The settlement was submitted in September and motioned for preliminary approval last week, although it is still subject to U.S. District Court approval. Juniper, a networking hardware company based in California, admitted no fault or wrongdoing as part of the settlement.

Source: Planadviser.com, November 2022

SEC Swing-Pricing Proposal Could Impact 401k Savers

A proposal by the SEC to alter the way open-end funds operate could have a detrimental impact on retirement savers if implemented. The Investment Company Institute cautioned that the "SEC's proposed "hard close" "...is likely to make it impossible for 401k plans to place trade orders for their participants."

Source: Napa-net.org, November 2022

Tackling Beneficiary Designations

The majority of beneficiary designation issues affecting plan sponsors and administrators arise after a participant has passed away and is no longer able to make changes. To prevent costly and time-consuming, competing claims and potential litigation related to 401k account balances, plan sponsors and administrators should strongly consider investing more time in developing and following through with best practices related to beneficiary designations that are intended to avoid any future, competing claims and potential litigation.

Source: Foley.com, November 2022

IRS Provides Extension to Certain Retirement Plan Amendment Deadlines

On Aug. 3, 2022, the IRS issued Notice 2022-33 which extends the deadlines for certain plan sponsors to adopt amendments under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the Bipartisan American Miners Act of 2019 (Miners Act) until Dec. 31, 2025. This extension applies to non-governmental qualified retirement plans, 403b plans as well as collectively bargained plans, and IRAs.

Source: Bsk.com, November 2022

Canadian Employees Delaying Retirement Due to Rising Cost of Living: Survey

Nearly two-thirds (62 percent) of Canadian pre-retirees say the rising cost of living is preventing them from retiring when they'd like to, up from 56 percent in 2021, according to a new survey by Fidelity Canada. The survey, which polled more than 1,900 Canadians aged 45 and older, found 55 percent said a lack of savings is holding them back from retiring, while 45 percent cited the performance of their investments.

Source: Benefitscanada.com, November 2022

How Engaged 401k Participants Are Saving Significantly More

When it comes to 401k participant savings rates, engagement matters, a lot. Engaged participant savings rates are a remarkable 56% higher than rates for unengaged participants, according to Empower's just-released second annual research study, Empowering America's Financial Journey: How People Save, Invest and Get Advice.

Source: 401kspecialistmag.com, November 2022

Americans Are Increasingly Directing Attention to Retirement Plans

New findings from Voya Financial show that a workplace retirement plan is just as important for employee retention as a competitive salary and flexible work arrangements. Sixty percent of employees surveyed said they were more likely to stay with their current employer if they offered an employer-sponsored retirement plan, compared to 64% who said they would stay for a competitive compensation package and 63% for flexible work hours.

Source: 401kspecialistmag.com, November 2022

Workers React to Retirement Language and Imagery

Organizations are taking a psychological approach to analyze the way Americans think about their retirement. New research from Capital Group studied close to 2,500 American adults and how they respond to retirement language and imagery, confirming a finding that the industry has understood for some time, there is no one-size-fits-all approach to retirement communications.

Source: 401kspecialistmag.com, November 2022

Impact on Plan Sponsors of Higher IRS Retirement Plan Limits

As a result of sustained high rates of inflation over the past several months, the 2023 retirement plan limits recently announced by the IRS reflect unprecedentedly large increases over the 2022 limits. This article examines the implications of the 2023 limit increases for retirement plan sponsors from a variety of different perspectives to help them better prepare and manage the potential impact points for next year.

Source: Segalco.com, November 2022

What Responsibilities and Liabilities Come With Signing the Form 5500?

You are wise to check on what the responsibilities associated with signing the 5500 are. Here's a quick review.

Source: Plansponsor.com, November 2022

SPARK Releases Updated Data Security Best Practices

The SPARK Institute released Monday its Plan Sponsor and Advisor Guide to Cybersecurity, laying out its specific data security "Best Practices and seventeen Control Objectives." Developed by its Data Security Oversight Board, SPARK's best practices and control objectives establish a base of communications between recordkeepers and the public through third-party audits of cybersecurity control objectives.

Source: Planadviser.com, November 2022

Recordkeeper Consolidation Leads to Drop in Proprietary Product Share, Opening Door for Asset Managers

The consolidation of DC plan providers may not be as much of a threat to asset managers as some have thought, with recordkeeper integration needs and legal risk meaning less focus on proprietary investment options, according to new research from ISS Market Intelligence.

Source: Planadviser.com, November 2022

Takeover Target Targeted in Excessive Fee Suit

An excessive fee suit involving proprietary funds claims that fiduciary breaches not only undermined participant retirement security but played a role in a recordkeeping acquisition. The suit alleges that a "flawed process resulted in a series of outcomes that caused the Plan and its participants and beneficiaries to sacrifice retirement savings to poor performance and swollen costs which inured to the benefit of MassMutual's bottom line."

Source: Napa-net.org, November 2022

Three Million Dollar Settlement Struck in Managed Accounts Suit

The suit, which had alleged that "...many managed account services merely mimic the asset allocations available through a target-date fund while charging additional unnecessary fees for their services," has announced a cash settlement.

Source: Napa-net.org, November 2022

A 401k Plan Sponsor's Guide to Hiring a Financial Advisor

There are so many varieties of financial advisors that it can be confusing what you should be looking for. This article is intended to act as a guide for you as you select a financial advisor for your retirement plan or review the current advisor as part of your fiduciary responsibility.

Source: Jdsupra.com, November 2022

IRS Opens Determination Letter Program to 403b Plans

The IRS recently announced the expansion of its determination letter program to individually designed 403b plans beginning June 1, 2023. This presents a significant and welcome opportunity for sponsors of 403b plans -- such as universities, schools, tax-exempt organizations, and churches -- to secure long-awaited assurance from the IRS on plan document compliance.

Source: Icemiller.com, November 2022

Employee Benefit Plan Year-End Deadlines

This year, with the delay of the deadline for amending qualified plans, 403b plans, and governmental 457b plans to comply with the SECURE Act and CARES Act, year-end to-dos are on the light side; however, there are still a few deadlines to be aware of depending on what types of plans an employer sponsors, including the first item mentioned below, a disclosure that applies to the majority of employers.

Source: Frostbrowntodd.com, November 2022

Crypto Craze Cracks, Raising Potential 401k Fiduciary Liability?

Oops! That didn't go as planned. A major player in the cryptocurrency world took a spectacular nosedive amidst celebrity, politics, and intrigue. This happened as the hard-to-understand virtual currency has already suffered from a series of negative headlines. The collapse of FTX only makes it worse.

Source: Fiduciarynews.com, November 2022

Resilient Retirement Savers Shifting Focus to Short-Term Needs: Study

Rising prices and inflation are certainly affecting American workers but despite the economic environment, Americans remain resilient. More than 63 percent of Americans are confident they are financially on track for retirement. The study analyzes the behavior of approximately 4.3 million active DC participants to better understand their savings habits and levels of involvement with retirement planning, particularly during a highly challenging economic and financial environment.

Source: Businesswire.com, November 2022

The "Entity" Difference Between 403b and 401a Plans

Think about this: the tax-favored status of the contributions to a 401a plan, and the earnings on the fund held by the plan, are derived from the tax-exempt status of the trust which receives and holds those funds. Compare this to the 403b plan. The favorable tax status granted to 403b plan participants does not derive from the tax-exempt status of any particular organization or entity. Instead, the statutory language makes it clear that it is derived from the contributions being made to an annuity contract, a custodial account, or a retirement income account.

Source: Businessofbenefits.com, November 2022

Report Urges Pension Plan Fiduciaries to Focus on Finance When Considering ESG Factors

A new report from the C.D. Howe Institute says pension plan fiduciaries shouldn't ignore climate change and other environmental, social, and governance factors that are relevant to financial purposes. However, when plan fiduciaries use ESG factors to prioritize social or environmental concerns, such as those expressed by plan members, they put themselves on shaky legal ground, said the report.

Source: Benefitscanada.com, November 2022

How Does Local Cost of Living Affect Retirement for Low and Moderate Earners?

This paper uses the Health and Retirement Study to explore how the local cost of living affects Social Security replacement rates and household behavior. In theory, labor markets with a high cost of living also offer more compensation. If this compensating differential is paid in wages, rather than benefits, it reduces the share of earnings replaced by Social Security due to the progressive benefit structure. This paper examines how important the cost of living penalty is, in practice, and whether it impacts household' saving or labor supply.

Source: Bc.edu, November 2022

SPARK Institute Releases Updated Cybersecurity Standards for Plan Sponsors and Advisors

Recordkeepers and retirement industry consultants are banding together to beef up cybersecurity. A collaborative effort between recordkeepers and consultants leads to updated Data Security Best Practices and a new Plan Sponsor and Advisor Guide to Cybersecurity to strengthen the retirement industry's defenses against cyber criminals.

Source: 401kspecialistmag.com, November 2022

What Retirement Plan Sponsors Need to Know About SECURE 2.0

Federal legislation that would substantially impact retirement plan sponsors, service providers, and plan participants appears likely by year-end. Although the contours of a final bill still need to be refined, certain provisions are likely to be included in enacted legislation, dubbed SECURE 2.0. It is not too early for plan sponsors to begin preparations. Here are some steps plan sponsors may want to consider now and when legislation becomes reality.

Source: Troweprice.com, November 2022*

FTX Bankruptcy Has Chilling Effect on Crypto Use in Retirement Plans

The rapid collapse of the cryptocurrency exchange FTX has some in the retirement industry second-guessing a recent push toward including cryptocurrency in 401ks and other defined contribution retirement plans.

Source: Planadviser.com, November 2022

When Is Spousal Consent Required Under a Qualified Retirement Plan?

Spousal consent for qualified retirement plans has been in the spotlight recently as a result of the COVID-19 pandemic. In response to the temporary lockdowns in 2020 and the extended period of social distancing that followed, the IRS began to permit electronic consent rather than the standard requirement for a consenting spouse to sign in the presence of a notary public. Spousal consent is only required in certain situations which are reviewed here.

Source: Klblawgroup.com, November 2022

New IRS Revenue Procedure for 403b Plans

The IRS has now issued Revenue Procedure 2022-40, allowing the sponsor of an individually designed 403b plan to submit a request for a determination letter. Under this program, for the first time, an individually designed 403b plan will be able to rely on the IRS' approval that the form of the document meets all IRS requirements.

Source: Boutwellfay.com, November 2022

Participant Loans: Important Considerations

Many retirement plans allow participants to take loans from their accounts. But that entails more than simply deciding to allow participants to do so. That is only the beginning. Some procedures must be followed, and important considerations that flow from that initial choice. Here are some questions and matters concerning plan loans.

Source: Asppa.org, November 2022

Coming Soon to a 401k Plan Near You: Personalized Target-Date Accounts

Managed accounts are the second most popular choice of QDIA. But before you switch to a managed account you should consider an emerging disruptive innovation that combines managed accounts with TDFs, providing the better characteristics of both. We call this innovation Personalized Target Date Accounts.

Source: 401kspecialistmag.com, November 2022

Plan Approval Program Expands to 403b Retirement Plans

The IRS and Treasury will let the churches, public schools, and charities that have 403b retirement plans take advantage of some of the same individually designed retirement plan determination letter program used by qualified retirement plans, beginning in June 2023.

Source: Thetaxadviser.com, November 2022

Senators Toomey and Cotton Write Warning Letters to ESG Industry

Senator Pat Toomey wrote a follow-up letter to twelve ESG ratings and analytics providers on October 31 requesting that they keep documents related to the methodologies for their environmental, social and governance ratings. Six of the twelve provided responses. The other six either have not responded or provided responses that the Toomey considered "incomplete". Senator Cotton sent a more threatening letter to 51 law firms that counsel investors and other actors in the ESG sector.

Source: Plansponsor.com, November 2022

A DOL ESG Investigation Story

An adviser's message to his peers is to not fear including ESG factors in investment analysis.

Source: Planadviser.com, November 2022

Webcast: Current Trends in Target-Date Fund Litigation

Litigation of 401k plan fees and investment fund performance is on the rise. This webcast provides a review of recent 401k litigation cases, trends involving both active and index/passive target-date funds, and fiduciary best practices to avoid litigation.

Source: Fiducientadvisors.com, November 2022

The SECURE Act: Changes for Long-Term/Part-Time Employees

The provision concerning long-term/part-time employees applies to all 401k plans. Effective for plan years beginning after December 31, 2020, the SECURE Act requires that long-term/part-time employees who are non-union employees must be permitted to make elective deferrals under an employer's 401k plan after three consecutive 12-month periods during each of which the employee has worked between 500 and 999 hours per year.

Source: Consultrms.com, November 2022

2022: Gender Lens in DC Plans

The adverse economic consequences of the pandemic disproportionally affected women. Women have dropped out of the workforce at record numbers to take on additional caregiving responsibilities. The study analysis shows that the participation rates of women remain lower than those of men, that women and men contribute at the same rates, women continue to invest more conservatively, women continue to claim hardship at greater rates and have higher loan-to-balance ratios than to men, and 401k balances of women continue to lag those of men.

Source: Bofa.com, November 2022

Arbitration of ERISA Plan Disputes

This article discusses the general enforceability of arbitration clauses in certain disputes, including class actions, with a particular focus on the enforceability of arbitration clauses involving legal claims made under ERISA. It also specifically analyzes the advantages and disadvantages of arbitration provisions for retirement plan sponsors.

Source: Wagnerlawgroup.com, November 2022

What Kind of Payments Can a Hardship Request Cover When Buying a Home?

Can a hardship request cover costs directly related to the purchase of a principal residence for the employee including the payoff of outstanding debts if that is what is required for the participant to qualify for the mortgage loan? Experts from Groom Law Group and CAPTRUST answer the question.

Source: Plansponsor.com, November 2022

Midterm Election Results Could Delay SECURE 2.0

A shift in Congressional power in Washington to Republicans could delay passage of SECURE 2.0 and push Democrat's ESG and cryptocurrency efforts to administrative tactics, experts say.

Source: Planadviser.com, November 2022

A Rollover Recommendation Is a Securities Recommendation

The SEC and FINRA are in alignment with the DOL's position that a recommendation to roll over is, in effect, a securities recommendation. This may explain why the DOL, SEC, and FINRA all expect broker-dealers and investment advisers to have information about the investments held in a participant's account, that is, how can a "sell" recommendation be made without knowing the investments that the recommendation covers?

Source: Fredreish.com, November 2022

Orphan Accounts Pose Fiduciary Liability to 401k Plan Sponsors

It's so easy to pay it no mind. Employees leave the firm but don't take their 401k account with them. Many argue this is the prudent thing for the employee to do since the plan will often pay institutional rates for mutual funds while rolling the assets over into an IRA may be subject to higher retail rates. But what about from the plan sponsor's perspective?

Source: Fiduciarynews.com, November 2022

401k End of Year Reminder Checklist - 2022

This 401k plan checklist will help you end your plan year smoothly.

Source: Consultrms.com, November 2022

Rollover Recommendations: Do the SEC and DOL Requirements Align?

There are a few differences between the SEC and the DOL guidance that broker-dealers and their registered representatives should know about, including that the SEC rollover guidance applies to a much broader array of retirement plans and accounts, and also that the SEC guidance does not require disclosure about the best interest reasons for the rollover recommendation as does the DOL under PTE 2020-02.

Source: Brokerdealerlawblog.com, November 2022

What Midterm Election Results Could Mean for Retirement Policy

The Nov. 8 midterm election will likely shape the future for Social Security and Medicare programs.

Source: 401kspecialistmag.com, November 2022

October a Light Trading Month for 401ks: Alight

October was another light trading month for 401k plan investors, according to the latest iteration of the Alight 401k Index. With just two above-normal trading days, the index revealed stable value funds accounted for over 80% of net inflows, while outflows were primarily from target date funds (37%), company stock (35%), and large U.S. equity funds (12%).

Source: 401kspecialistmag.com, November 2022

A Boon for the 403b: IRS Expands Tax-Favored Approval Process

The IRS announced the expansion of one of its programs for approving retirement plans, allowing 403b plans -- which are used by certain public schools, churches, and charities -- to apply for the same tax-favored treatment as qualified retirement plans. As of June 2023, the IRS will allow 403b plans to use the same individually designed retirement plan determination letter program used by 401ks.

Source: 401kspecialistmag.com, November 2022

Callan: DC Plan ESG Use Drops in '22 on Backlash, Rule Confusion

Pushback against ESG investing by state governments and some in the investing community led to a drop in use among institutional investors this year, according to research released by fund consultant Callan. In annual surveying of 109 institutional investors on environmental, social, and governance implementation, Callan found just 35% of respondents incorporated ESG factors into investment decisions this year, down from 49% in 2021.

Source: Plansponsor.com, November 2022*

Self-directed Retirement Plan Participants Allocate Few Assets to In-Plan ESG Funds

Self-directed retirement plan investors infrequently allocate to environmental, social, and governance investments, new research finds. The research, by PGIM and the Employee Benefit Research Institute, examined the allocation decisions of 9,324 new defined contribution plan participants, across 108 DC plans, who are directing their accounts and where there is at least one ESG fund available in the core menu.

Source: Plansponsor.com, November 2022

DOL Clarifies Bonding Requirements for Pooled Employer Plans

A DOL information letter clarifies how ERISA's bond requirements apply to a pooled employer plan. A PEP is a type of multiple-employer plan created by the SECURE Act to make it easier for unrelated employers to participate in group retirement plans.

Source: Mercer.com, November 2022

2022 Retirement Plan Year-End Amendments and Operational Compliance

As the end of 2022 approaches, it's again time for plan sponsors to review their plan documents and plan operations to ensure compliance with increasingly complex qualification requirements and moving deadlines. While there are few, if any, required plan amendments for 2022, plan sponsors must remain diligent about amendment deadlines, operational compliance with changes in law, and ensuring later-adopted plan amendments accurately reflect plan operations.

Source: Groom.com, November 2022

Auto-Portability Receives Bipartisan Backing With House Bill

A new bill that would allow for automatic 401k rollovers has received support from the U.S. House of Representatives, officially securing bicameral legislative backing. The Advancing Auto-Portability Act of 2022 (H.R. 9252) was introduced on October 28 and is aimed at reducing leakage in defined contribution retirement plans.

Source: 401kspecialistmag.com, November 2022

Adviser CEO Faces Up to 45 Years for Fraud, Keeping Employee 401k Contributions

The CEO of a financial advisory firm pled guilty last week to charges including embezzling more than $313,000 from clients and using employee contributions to the firm's 401k plan for both personal and company use. He also pled guilty to two counts of wire fraud and one count of making a false statement to the IRS in connection with schemes to defraud clients and failing to pay the employees' retirement contributions. He faces up to 45 years in prison.

Source: Planadviser.com, November 2022

Political Pressure Aside, Asset Managers Stand Pat on ESG Integration

Regardless of the divided political pressure surrounding environmental, social, and governance investing, asset managers remain committed to considering such factors, with climate change remaining a top priority for firms, a new Cerulli report suggests.

Source: Napa-net.org, November 2022

Crypto Keeper Presses Court to Hold DOL to Its Word(s)

ForUsAll, a recordkeeper that has sued the Labor Department based on its comments regarding cryptocurrency in defined contribution plans, has told a federal judge it's fine with dismissing its suit if the court will hold the agency to its previous statements.

Source: Napa-net.org, November 2022

Retirement Plan Committee Best Practices

Each time the retirement plan committee meets, does it feel like there is a new rule or legislation your plan is required to comply with? While at the same time, participants are demanding more of you and your organization to be successful because the defined contribution plan is likely the only savings vehicle these individuals will ever have for retirement. If these feelings resonate with you, so will the committee best practices we discuss in this guide. This paper will help you understand what ERISA (and similar state laws) requires for plans, how committees have typically functioned, and how committees will need to function to be successful and sustaining for years to come.

Source: Multnomahgroup.com, November 2022

Seventh Circuit Still Skeptical of Excessive Fee Claims After High Court Ruling

The 7th US Circuit Court of Appeals recently upheld the dismissal of a participant's claims that DC plan fiduciaries imprudently allowed excessive administrative and investment fees (Albert v. Oshkosh Corp.). The court was unpersuaded by the participant's request to vacate the original district court decision dismissing his lawsuit in light of the Supreme Court's decision in Hughes v. Northwestern University. The 7th Circuit's decision, in this case, extends a growing trend of federal appeals courts expressing skepticism toward some of the most common allegations in many ERISA excessive fee lawsuits since the high court's Northwestern ruling.

Source: Mercer.com, November 2022

Tech Stocks Weigh on Funds Popular With 401k Plans

Some of the most popular retirement funds have large holdings of big-tech stocks like Meta, Amazon, and Apple. That boosted their performance in 2021 as shares surged to record highs, but turned into a drag this year as the broader stock slump hit high-flying technology companies particularly hard.

Source: Investmentnews.com, November 2022

Plan Amendment Deadline for SECURE and CARES Amendments

This Tax Magazine article by Groom principals Elizabeth Dold and David Levine contains a summary of the key SECURE, Miners, and CARES Act amendments, in chart format, for both defined benefit and defined contribution plans, along with a look at the amendment deadlines that apply to these provisions.

Source: Groom.com, November 2022

How to Use Your 401k Funds to Start a Business

One of the biggest challenges entrepreneurs face, after coming up with their idea, involves financing that new business. If you've been working for some time, you've no doubt had the opportunity to set aside some money to use for this purpose. On the other hand, that savings may not be enough. Did you know there might be a source close to home? It's sitting right there in your 401k plan. This strategy is referred to as "Rollovers As Business Startups" or "ROBS."

Source: Forbes.com, November 2022

Iowa Court in the Hy-Vee Case Calls Out Credibility of Defense "Playbook" of Filing Indiscriminate Motions to Dismiss in Every Excessive Fee Case

Plan sponsors have had good recent success in excessive fee and performance lawsuits, with three federal circuit courts of appeal upholding motions to dismiss. But before we start reaching any conclusions as to whether the tide has changed in the long war in excessive fee cases an Iowa court in Rodriguez v. Hy-Vee, Inc. has applied the recent appellate case law and come to mixed conclusions on familiar claims of excessive investment and recordkeeping fees.

Source: Euclidspecialty.com, November 2022

Navigating Common Retirement Savings Pitfalls

When most people start on their retirement savings journey, the path can seem straightforward. However, life often throws up obstacles along the way. Understanding the impact of those pitfalls can help your retirement investors make more informed decisions as they look to make the most of their retirement savings journeys.

Source: 401kspecialistmag.com, November 2022

Delaware Law Expands Access to Retirement Plans

Delaware is joining a growing list of states that require employers to automatically enroll their workers in a state-sponsored retirement savings plan unless the employer already provides retirement benefits. The state is taking steps to implement the new law, which Gov. John Carney signed in August. Covered employees can begin to participate and make contributions on Jan. 1, 2025.

Source: Shrm.org, November 2022

SECURE 2.0 Likely to Pass This Year

Three separate bills, dubbed SECURE 2.0 when taken together, are likely to be passed into law by this December, according to Washington insiders.

Source: Planadviser.com, November 2022

Is Retirement Saving "Wasted" on the Young?

In a paper provocatively titled "The Life-Cycle Model Implies that Most Young People Should Not Save for Retirement" no fewer than four of them take 48 pages to make that case. Like most research, the conclusion is a premise based on assumptions. Here the most basic is that this thing called a "life-cycle model" is worth considering in the first place.

Source: Napa-net.org, November 2022

Excessive Fee Suit Settles in 18 Months

The parties in another excessive fee suit have come to terms six months after getting the green light to go to trial. In the U.S. District Court for the Eastern District of Wisconsin the parties noted that on Sept. 13, 2022, they "...mediated before private mediator Bob Meyer of JAMS, and reached a settlement in principle to resolve this matter."

Source: Napa-net.org, November 2022

Should 401k Loans Be Allowed, Encouraged, or Forbidden? A Fiduciary Perspective

As interest rates increase, the cost of borrowing money has increased. It's not surprising if more people begin to look at borrowing from their own 401k retirement savings accounts versus borrowing from more traditional sources. Is this a good idea? Indeed, is it not just a good idea, but something that should be encouraged? Or is it the path to retirement ruination and should it not even be allowed?

Source: Fiduciarynews.com, November 2022

Goldman Sachs Successful in Getting 401k Fee Class Action Dismissed

A New York district court recently summarily dismissed, with prejudice, a 401k plan participant's putative class action complaint alleging breaches of fiduciary duty. The Plaintiff alleged that the Plan fiduciary-Defendants breached their duties of prudence and loyalty under ERISA by (1) failing to adopt an Investment Policy Statement, and (2) making decisions regarding the choice to remove or retain certain underperforming investment options based on their self-interest.

Source: Erisalitigationadvisor.com, November 2022

ESG Considerations for Retirement Plans: A Moving Target

For those with an eye on ERISA and its fiduciary rules, the past few years have caused whiplash when it comes to environmental, social, and corporate governance investments in retirement plans. With a new rule from the Department of Labor imminent, this article reviews where we are, how we got here, and what's next.

Source: Benefitslawadvisor.com, November 2022

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