December 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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What Does SECURE 2.0 Mean for 403b Plans?

The SECURE 2.0 Act makes several changes to 403b plans, aiming to standardize them with 401k plans to give 403b plan sponsors and participants broader retirement saving options. Experts weigh in on how SECURE 2.0 may make 403b plans operate more like 401ks, including being able to participate in PEPs.

Source: Planadviser.com, December 2022*

Top Five Changes in the SECURE 2.0 Act for Plan Sponsors and Participants

As part of the omnibus spending bill passed in a frenzy before the holiday break, Congress included the SECURE 2.0 Act. This new law contains several changes that will have a profound impact on the rules governing retirement plans. This article summarizes the top five provisions affecting plan sponsors and participants.

Source: Littler.com, December 2022

SECURE 2.0 Changes Rules for Retirement Plans

The Act makes numerous changes affecting retirement plans. This article provides an overview of the changes that we believe are of most interest to larger plan sponsors. Any plan amendments needed as a result of these changes must be adopted by the last day of the 2025 plan year unless extended by the DOL or the IRS.

Source: Foley.com, December 2022

IRS Proposed Regulations Would Permanently Allow Remote Witnessing of Spousal Consent

The IRS issued new proposed regulations that would permanently change the rules that require spousal consent for plan distributions to be signed in the physical presence of a notary or plan representative. Specifically, the proposed regulations would allow plans to accept remote notarization or witnessing by a plan representative if the remote process meets certain standards aimed at ensuring the integrity of the process.

Source: Erisapracticecenter.com, December 2022

DOL's New Rule on ERISA Investment Duties and Its Relationship to ESG

The new rule guides the fiduciary duties of prudence and loyalty as they apply to the selection of plan investments. The clearest path to adopting an ESG investment or option, safely and without unnecessary legal risk and uncertainty, is to do so for the express purpose of maximizing risk-adjusted financial returns and to contemporaneously document the reasons for that determination.

Source: Cov.com, December 2022

How Does One Implement a Student Loan Matching Benefit?

The SECURE 2.0 Act passed Congress and would allow employers to offer matching 401k, 403b, 457b, and SIMPLE IRA contributions if the participant elects to pay down student loans instead of contributing to a retirement plan. This option would be available starting after December 31, 2023. How should plan sponsors go about implementing this provision, if they choose to?

Source: Planadviser.com, December 2022

SECURE 2.0: A Summary of Key Changes Impacting Employer-Provided Retirement Plans

SECURE 2.0 contains significant changes to employer-provided retirement plans and individual retirement plans, referred to in the CAA as the SECURE 2.0 Act of 2022. These provisions largely build upon the changes made under the SECURE Act, which was signed into law on Jan. 1, 2020. This article addresses some of the key provisions under SECURE 2.0 that will impact employer-provided retirement plans.

Source: Foxrothschild.com, December 2022

The Colgate Participant Account Cyber Theft Case Survives Dismissal

A New York federal district court ruled on December 19, 2022, that a participant in the Colgate-Palmolive defined contribution plan adequately alleged breach of fiduciary duty claims against the plan recordkeeper and the plan fiduciary committee. It is a curious decision that is worth studying to understand whether plan participants have potentially viable claims against the plan recordkeeper and plan fiduciaries when a participant's account is hacked.

Source: Euclidspecialty.com, December 2022

SECURE 2.0 Act of 2022 Arrives: Another Landmark Retirement Package

The wait is over for SECURE 2.0, a long-awaited (and debated) package of retirement plan reforms. Given the breadth of the changes and the anticipated regulatory efforts to implement the new law, virtually all qualified retirement plans will need to be reviewed in conjunction with SECURE 2.0's passage. This is a high-level summary of some key highlights for employers and retirement plan sponsors.

Source: Erisapracticecenter.com, December 2022

SECURE 2.0 Is Finally Passed With Gifts for Everyone

SECURE 2.0 implements comprehensive pension reform and includes many changes that have been on the benefits community's wish lists for some time. Here is a summary of some of the major changes grouped under the goals of the legislation. Provisions reflect several themes.

Source: Cohenbuckmann.com, December 2022

Congress Delivers SECURE 2.0 for the Holidays

Congress made several changes to retirement plans as part of the Consolidated Appropriations Act of 2023, which recently passed both the House and Senate. The final bill contains several provisions affecting retirement plans under Division T of the bill titled "Secure 2.0 Act of 2022." SECURE 2.0 builds on the Setting Every Community Up for Retirement Act, which was passed in 2019. Here is a high-level summary of some of the key provisions that affect plan sponsors of retirement plans.

Source: Benefitsnotes.com, December 2022

Excessive Fee Suit Targets Service Provider "Overpayments"

Commenting that "the proliferation of 401k plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers," another excessive fee suit has been filed against a plan smaller than typical for this genre.

Source: Napa-net.org, December 2022

SECURE 2.0 Retirement Reforms Set to Become Law

The enactment of SECURE 2.0 caps several years of congressional effort. Numerous stakeholders have worked to educate lawmakers about the value of the employer-based retirement system and the need for many policy changes to support it. This article provides a high-level summary of some key provisions in the legislation.

Source: Mercer.com, December 2022

Wells Fargo Settles Multimillion Dollar 401k Suit With DOL

Wells Fargo has settled with the DOL after an investigation revealed that the fund overpaid for company stock purchased for the plan during specific years. The settlement requires Wells Fargo to pay almost $132 million to its 401k plan participants and a penalty of nearly $13.2 million. The lawsuit involves Wells Fargo and Company, Wells Fargo Bank, and GreatBanc Trust Company, a trustee of the 401k plan.

Source: Hallbenefitslaw.com, December 2022

SECURE 2.0 Act Passes

The widely anticipated SECURE 2.0 Act passed through Congress as part of the government's year-end spending bill. This article covers the biggest changes it will bring to life.

Source: Captrust.com, December 2022

RMD Age Increases to 73 in 2023 Under SECURE 2.0

While it came down to the wire, both the House and Senate have now approved the much-anticipated SECURE 2.0 Act of 2022 as part of the mammoth $1.7 trillion omnibus spending bill.

Source: 401kspecialistmag.com, December 2022

SECURE 2.0 Headed for Enactment

While it came down to the wire, both the House and Senate have now approved the much-anticipated SECURE 2.0 Act of 2022 as part of the mammoth $1.7 trillion omnibus spending bill.

Source: Ntsa-net.org, December 2022*

Going Boldly: The Retirement Savings for Americans Act 2022

Congress earlier this month introduced the Retirement Savings for Americans Act of 2022, which advances the idea of a national 401k plan. What's more, the bill carries both bipartisan and bicameral support, as it is backed in the Senate by Democrat John Hickenlooper and Republican Thom Tillis, and in the House by Democrat Terri Sewell and Republican Lloyd Smucker.

Source: Morningstar.com, December 2022

2022 Custom Target-Date Fund Study

Over the past 15 years, target-date funds have become foundational in the defined contribution (DC) system. This study was launched in 2017, to provide insight into custom target-date fund solutions (cTDFs), including their basic structure, asset allocation, asset class exposure, and returns. 2022 is the third iteration of the study, evaluating data through year-end 2021. The analysis represents cTDF assets of $516 billion across plans with over $1.5 trillion in assets collectively. A total of 14 organizations that manage cTDFs participated in the study.

Source: Dciia.org, December 2022

Proposed Changes to the DOL's Voluntary Fiduciary Correction Program

The DOL published proposed updates to its Voluntary Fiduciary Correction Program. The VFCP is designed to encourage employers to voluntarily comply with ERISA by voluntarily correcting certain prohibited transactions and submitting those corrections to the Program for approval. The proposed changes are the first updates to VFCP since 2006 and provide, for the first time, a self-correction feature for delinquent participant contributions and loan repayments, the most common prohibited transactions under ERISA. Here is a summary of the proposed changes.

Source: Truckerhuss.com, December 2022

A $4 Billion 401k Strikes $4 Million Settlement

A $4 billion plan has struck a $4 million settlement and "meaningful prospective relief" in a suit that challenged the fees it paid itself as recordkeeper for its plan. Plaintiffs brought suit against Xerox Corporation, the Xerox Corporation Plan Administrator Committee and John Does 1-30 for breaching their fiduciary duties "with respect to the Xerox Corporation Savings Plan in violation of ERISA, to the detriment of the Plan, its participants, and their beneficiaries."

Source: Napa-net.org, December 2022

What 401k Plan Sponsors Need to Know About Stable Value Funds

Whether you already have a principal preservation option in your 401k plan, are considering making a change, or are conducting routine due diligence, acquainting yourself with the basics of stable value funds can help you become a better-informed fiduciary. This article provides a quick overview of what stable value funds are and a helpful 401k stable value glossary.

Source: Jhinvestments.com, December 2022

What the DOL's Final ESG Rule Means for Plan Sponsors

On November 22, 2022, the DOL issued its much-anticipated final rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," which allows ERISA fiduciaries to consider climate change and other environmental, social, and governance factors when they select retirement plan investments and exercise shareholder rights such as proxy voting. This article summarizes the changes made from the 2020 final rules and provides future considerations.

Source: Jhinvestments.com, December 2022

DOL Moves to Dismiss Suit Challenging Its 401k Cryptocurrency Investment Guidance

The DOL recently asked a District of Columbia federal court judge to dismiss a lawsuit challenging its 401k cryptocurrency investment guidance. ForUsAll, a San Francisco-based 401k recordkeeping firm, sued the DOL in June 2022, claiming that the agency had changed policy in violation of the Administrative Procedure Act, which requires a public notice and comment period. In response, the DOL argues that its regulatory guidance does not have the force of law.

Source: Hallbenefitslaw.com, December 2022

DOL Proposes Significant Changes to VFCP Program

The VFCP allows plan sponsors to voluntarily correct certain fiduciary breaches to avoid civil enforcement actions and civil penalties imposed under ERISA. The most relevant components of the proposed changes for plan sponsors relate to delinquent contributions of participant deferrals and loan repayments as these tend to occur more frequently than other issues corrected through the VFCP. Importantly, the proposed amended and restated VFCP would add a new self-correction feature, clarify existing transactions currently eligible for correction and simplify certain administrative or procedural requirements for participation in and correction of transactions under the VFCP.

Source: Employeebenefitsblog.com, December 2022

Secure 2.0 in the Consolidated Appropriations Act, 2023

As expected, the SECURE 2.0 Act of 2022, an extensive piece of legislation aimed at retirement plan reform, is included in the Consolidated Appropriations Act of 2023. SECURE 2.0 includes over 100 provisions intended to expand coverage, increase retirement savings, and simplify and clarify retirement plan rules.

Source: Benefitslawadvisor.com, December 2022

Department of Labor's Final ESG Rule Clarifies Duties

For decades, the DOL has addressed the tension between the investment duties of plan administrators and the concerns about the environmental, social, and governance actions of the companies that plans invest in. In this latest guidance, the DOL amends the Investment Duties regulation, and this final rule will generally become effective on January 30, 2023, with the provisions related to proxy voting effective December 1, 2023.

Source: Ascensus.com, December 2022

Alternative Investments in Participant Directed Individual Account Plans

Investment in private equity funds has long been a concern of practitioners, but generally concerning the issue of whether it was holding plan assets. While the plan asset issue continues to be a significant one concerning investments in private equity funds, recently the focus has been on offering private equity funds as a part of an asset allocation fund, an issue that had been addressed both by the Department of Labor and a California federal district court on multiple occasions, as discussed here.

Source: Wagnerlawgroup.com, December 2022

DOL Finalizes ESG Rule for ERISA Plan Fiduciaries

The DOL has released its final rule clarifying how and when ERISA fiduciaries may consider ESG factors in making investment decisions for a plan. The rule also offers substantial guidance on the duties and responsibilities of plan fiduciaries in exercising shareholder rights, including proxy voting. Taken as a whole, the revisions contained in the final rule provide substantial relief to investment professionals who already incorporate ESG factors into their risk and return calculations and allow plans to play a central role in advancing ESG objectives, as long as these objectives are tied directly to the prudent assessment of risk and return.

Source: Shearman.com, December 2022

Retirement Advisers Increasingly Want PEP Option in Toolbox

Pooled employer plans are still a nascent offering in the retirement market, but an increasing number of advisers want them available as an option and discussion point even if they're not recommending them.

Source: Planadviser.com, December 2022

SECURE 2.0 Bill Contains Popular and Widely Anticipated Retirement Reforms

The widely anticipated legislation known as SECURE 2.0 was attached to the omnibus spending package released by the Senate Appropriations Committee on Tuesday. The bill does not contain any huge surprises for those following its three component bills through Congress, and its most popular provisions survived intact into the final bill.

Source: Planadviser.com, December 2022

Tips for Small Employers Considering a Retirement Plan

Why might a small employer not have a retirement plan in place? A retirement service professional offers some insights into what obstacles give them pause and how they may address those concerns.

Source: Ntsa-net.org, December 2022

401k Issues That Could Use Some More Guidance From the Government

There are areas of the retirement plan space that aren't so clear. They're cloudy and until the Internal Revenue Service or the Department of Labor clears things up, 401k plan sponsors need to understand.

Source: Jdsupra.com, December 2022

Final ESG Regulation Published in the Federal Register

The highly anticipated final ruling from the DOL regarding its consideration of environmental, social, and governance factors within sponsored retirement plans has finally been unveiled and formally published in the Federal Register. In short, the final ruling gives plan fiduciaries the option to consider climate change and other environmental, social, and governance factors when they select retirement plan investments.

Source: Conradsiegel.com, December 2022

The Pendulum Swings Back: Final ESG Regulations Give Fiduciaries More Flexibility

Consideration of ESG investments can be a minefield for ERISA plan fiduciaries. There has long been tension between the desire of some plan participants and some fiduciaries to make plan investments that take environmental, social, and governance factors into account and ERISA's prudence, loyalty, and exclusive benefit rules. In today's polarized political world, ESG investments are especially controversial. There is a group in Congress that opposes them and would be comfortable with prohibiting or strictly restricting them. Others who are equally vocal feel that responsible investing should take ESG into account.

Source: Cohenbuckmann.com, December 2022

Why Do Some Small Businesses Offer Retirement Plans?

Many workers lack access to an employer retirement plan, and this coverage gap is driven by small firms. But about half of small firms do offer a plan, so it's important to understand the types of these firms with and without a plan. Available data suggest that the small firms with a plan are larger and have workers with higher earnings and education. Small firms without a plan cite three obstacles: not big enough or firmly established, workers prefer cash wages, and cost.

Source: Bc.edu, December 2022

SECURE 2.0 Act of 2022 Included in Omnibus Appropriations Bill

The SECURE 2.0 Act of 2022 is included in the $1.7 billion 2023 omnibus appropriations bill released in the early morning hours Tuesday by Senate Appropriations Committee Chair Patrick Leahy.

Source: 401kspecialistmag.com, December 2022

A Plan Sponsor's Duty to Search for Missing Participants

Most people don't plan to stay in touch with their former employer after they change jobs or retire. But employers that lose contact with participants who maintain a balance in the company's retirement plan risk breaching their fiduciary duties and jeopardizing the tax-qualified status of their plan. The plan sponsor retains fiduciary responsibility for these participants and must take reasonable measures to locate them.

Source: Newportgroup.com, December 2022*

IRS Expands Determination Letter Program for 403b Plans

IRS is expanding its determination letter program for individually designed plans to include many 403b plans. Rev. Proc. 2022-40 provides the first opportunity for 403b plan sponsors to get a determination letter, which gives assurance that their plan documents comply with all applicable IRC and regulatory requirements. IRS is also updating the program to incorporate changes for qualified plans made since the program's overhaul in 2016.

Source: Mercer.com, December 2022

Employment Law Firm Files Another Excessive Fee Suit

Another multi-billion-dollar 401k plan has been sued for "grossly excessive" fees. This time the target is the 16,000-participant, $2 billion plan of NCR Corporation. The plaintiffs in this case claim that "over the past six years, Plan participants have paid more than $20,000,000.00 (twenty million) in administrative fees," a sum that they allege is "nearly eight times what they should be."

Source: Napa-net.org, December 2022

Aon Hewitt Carves Out Settlement in Fiduciary Suit

After over four years of hard-fought litigation, the parties in a suit involving fund menu construction have come to a partial settlement with Aon Hewitt Investment Consulting as part of a suit relating to the FirstGroup America Retirement Savings Plan and the Aon Hewitt Funds.

Source: Napa-net.org, December 2022

Survey Shows More Employees Contributing to Retirement Plans, Receiving Matches

A PSCA study shows plan participant and employer contribution rates in 2021 combined to produce an average savings rate of 13.9% of pay, an all-time high.

Source: Investmentnews.com, December 2022

How Does the Threat of Litigation Shape Trends in DC Plan Design?

At this year's Center for Retirement Initiatives Policy Innovation Forum, industry and legal experts gathered to consider how the threat of litigation affects innovation in DC plan design. How does such litigation shape the actions of plan providers, sponsors, and those who advise them, and where is the balance between protecting plan participants and allowing sponsors to innovate and improve outcomes?

Source: Georgetown.edu, December 2022

Court Voids ERISA Plan's Arbitration Provision

A district court in New York recently refused to enforce an arbitration provision in an ERISA fiduciary breach lawsuit challenging the valuation of an ESOP. The ruling exposes the continued uncertainty as to the enforceability of arbitration provisions when applied to ERISA fiduciary breach claims.

Source: Erisapracticecenter.com, December 2022

The Unsung Importance of Self-Correction Memos

Self-correction of operational errors arising in qualified retirement plans is a critical means for plan sponsors to retain their plans' tax-qualified status. Self-correction has been promoted by the Internal Revenue Service as part of the Employee Plans Compliance Resolution System for approximately twenty years, but the rules for self-correction have evolved over that period, and some essential requirements of self-correction are still little understood. One recommended component of self-correction that can tend to be overlooked is the preparation of a self-correction memo.

Source: Eforerisa.com, December 2022

2023 Trends and Predictions for Retirement Plan Sponsors

In the wake of the pandemic and the great resignation, maybe the only thing we can be sure of is that 2023 will be a year of uncertainty. Along with an increased focus on financial wellness and employee retention, CAPTRUST's retirement plan experts predict several current themes will persist.

Source: Captrust.com, December 2022

DOL Announces Form 5500 Changes

The DOL announced changes to Forms 5500 and 5500-SF (short form) and released updated instructions on December 8. The DOL updates Form 5500 annually to keep it up-to-date with various regulatory changes. Every defined contribution and pension plan sponsor is required to file a 5500 to the IRS and DOL annually.

Source: Plansponsor.com, December 2022

2023 ERISA Plan Compliance Calendar

Being a retirement plan sponsor involves juggling many tasks, one of the more important is to make sure your plan complies with all pertinent federal legislation and regulations. A compliance calendar like this one helps you keep track of your company's required filings, their due dates, and related details so you can avoid incurring any fines or other penalties for late filings or missing information.

Source: Plansponsor.com, December 2022

Morningstar Raises "Safe" Retirement Withdrawal Rate to 3.8%

Morningstar's annual model of how much a retiree with a balanced portfolio should withdraw over a 30-year time horizon increased to a starting point of 3.8% on the back of higher bond yields and lower equity valuations. Morningstar researchers say higher interest rates and lower equity evaluations will make starting with a 3.8% withdrawal rate safe for a balanced saver over a 30-year time horizon.

Source: Planadviser.com, December 2022

Expert Consensus: SECURE 2.0 May or May Not Pass

Passage of the retirement reform legislative package known as SECURE 2.0 hinges primarily, if not entirely, on whether Congress can pass a budget by January 3, which is not a foregone conclusion. January 3 is when the next Congress is sworn in, and any unfinished bills under consideration must be proposed again.

Source: Planadviser.com, December 2022

Shareholder Activist Targets Target-Date Funds

The BlackRock Lifepath target-date funds have been targeted again, not in litigation, but by a shareholder activism group for their inclusion on a 401k menu.

Source: Napa-net.org, December 2022

In the Wake of COVID-19, Retirement Savings Surge

Benefits have long been a powerful recruiting and retention tool, and amid a tight labor market, the Plan Sponsor Council of America's 65th Annual Survey of 401k and Profit Sharing Plans found record-high rates of retirement savings alongside innovative plan designs. The survey found participant and employer contribution rates were at all-time highs in 2021 with a combined average savings rate of 13.9% of pay, and 2021 saw the highest employer contribution rate in the history of the survey (5.6% of pay).

Source: Napa-net.org, December 2022

Six Obstacles to Retirement Income Adoption

Ironically, programs designed to provide retirement income pay so little attention to the realization of that objective. Still, some have said that this could be the year for retirement income -- a combination of new offerings, volatile markets, and rising interest rates -- and yet, it still seems that there are obstacles to overcome. Here are six.

Source: Napa-net.org, December 2022

DOL Proposes Self-Correction Option and Other Changes to Voluntary Fiduciary Correction Program

The DOL proposed changes to its Voluntary Fiduciary Correction Program in November for the first time since 2006. The most significant change is the addition of a self-correction option for delinquent deposits of participant contributions and loan repayments. The other changes clarify and expand certain existing aspects of the VFCP. The DOL also proposed conforming changes to the prohibited transaction class exemption, PTE 2002-51, associated with the VFCP.

Source: Erisapracticecenter.com, December 2022

Vanguard's Defection From Net-Zero Group Further Clouds ESG Investment Commitments

The Vanguard Group has quit an asset manager climate alliance. Vanguard said it was leaving the Net Zero Asset Managers initiative due to "confusion about views of individual investment firms" and to ensure Vanguard's views on climate-related risks are their own, not grouped into the larger initiative.

Source: Planadviser.com, December 2022*

District Court Dismisses Two ERISA Lawsuits Challenging BlackRock TDFs

A judge in the U.S. District Court for the Eastern District of Virginia last week dismissed two lawsuits brought against two plan sponsors under ERISA. The suits had been brought against Capital One and Booz Allen Hamilton for using a BlackRock target-date fund series as their qualified default investment alternative.

Source: Planadviser.com, December 2022

Bipartisan Retirement Savings Bill Foreshadows Post-Secure 2.0 Debate

Senate and House members introduce a measure that would establish retirement accounts for low- and middle-income workers not covered by an employer plan.

Source: Investmentnews.com, December 2022

The Great Debate: Target Date Funds vs. Managed Accounts

On December 8, 2022, Retireholics hosted a debate on a topic that is on many people's minds in the 401k industry. Which is better: target-date funds or managed accounts? TDFs are the most popular Qualified Default Investment Alternative with MAs a distant second, but that could change with the current unraveling in TDFs.

Source: 401kspecialistmag.com, December 2022

Your 7-Point Year-End Retirement Checklist

Remember the late nights spent coupon hunting with family after Thanksgiving dinner, scouring the papers, and meticulously planning each store's purchases for Black Friday? Organizational year-end activity is no different, so here are seven financial to-do's that plan sponsors need to complete and remind participants about before December 31.

Source: 401kspecialistmag.com, December 2022

More Hackers Going After Retirement Savings, Experts Say

Employer retirement accounts are facing increasingly sophisticated attacks by hackers looking to get a slice of worker savings, and cryptocurrency investing is particularly at risk for scams, according to two financial-focused cybersecurity experts.

Source: Planadviser.com, December 2022

Class Dismissed: TIAA Dodges Massive Class Action Suit

A participant suit targeting TIAA for its loan practices in retirement plans has come up short in identifying a potential class on whose behalf to bring suit. The suit, filed back in early 2017, was brought by one Melissa Haley, who filed suit to recover money that she claims the Teachers Investment and Annuity Association unlawfully took from her retirement account in the Washington University Retirement Savings Plan.

Source: Napa-net.org, December 2022

The Secret(s) to a Good TPA Partnership

For years, one of the most persistent barriers to the smooth and efficient operation of many 401k plans has been the nature of the working relationship between the plan's advisor and its third-party administrator, or TPA.

Source: Napa-net.org, December 2022

Inflation Prompts Workers to Cut Back on Retirement Savings. What Can Employers Do?

Employees have faced considerable financial challenges, from rising interest rates to record inflation. An October Allianz Life survey of U.S. adults found that more than half said they had stopped or reduced retirement savings due to inflation, including 40% of baby boomers surveyed. Those trends are impacting employers, too, most notably in the form of increased compensation, benefits, and total rewards costs.

Source: Hrdive.com, December 2022

Podcast: A Swinging Pendulum: Taking Stock of ESG and DOL Changes in Retirement Plans

This ESG podcast series features short episodes covering core ESG concepts. The new Department of Labor regulations that go into effect on January 30, 2023, permit plan fiduciaries to consider ESG factors in retirement plans.

Source: Foxrothschild.com, December 2022

Something to Get ESGcited About? DOL Finalizes ESG- and Proxy-Related Rules

The release of the final regulation, focused as it is on ESG, is a major development, and by transcending ERISA-centric concerns, has received broad coverage and significant attention from the mainstream press, politicians, and others inside and outside of the United States who are not ERISA practitioners. This article (and accompanying chart) discusses some of the material impacts of the final regulation on plans, fiduciaries, and the market generally.

Source: Dechert.com, December 2022

DOL Issues Final ESG and Proxy Voting Rule

The DOL released a rule on Nov. 22, 2022, that clarifies fiduciary responsibilities under ERISA for selecting investments and exercising shareholder rights such as proxy voting. The regulation, titled "Final Rule on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," is summarized here.

Source: Callan.com, December 2022

A Checklist for Your Retirement Plan Fiduciary Insurance Renewal

In response to the continued proliferation of lawsuits against retirement plan fiduciaries, fiduciary liability insurers are raising rates, limiting coverage, and expanding their due diligence of fiduciary processes. This article provides a checklist that includes tips and best practices for policyholders to ensure they are in a strong position to obtain retirement plan fiduciary coverage when it comes time to review and avoid coverage denials when it comes time to pay benefits.

Source: Bradley.com, December 2022

401k Plan Matching Contributions: To True Up or Not True Up?

As a matter of plan design, for purposes of matching contributions, some 401k plans provide that a participant's compensation for the entire plan year is taken into account, while other 401k plans take into account a participant's compensation only for payroll periods for which the participant makes elective deferrals. The former design is commonly referred to as a "true up" feature. This article illustrates, through examples, each design, and addresses why a plan sponsor might choose one design over the other.

Source: Verrill-law.com, December 2022

DOL Releases Final Regulation on ESG Investing

Following the Biden administration's launch of a government-wide effort to combat climate change, on November 22, 2022, the DOL released a final regulation, which allows for more latitude in considering ESG factors when investing plan assets and backtracks on prior Trump-era restrictions in considering ESG factors.

Source: Paulhastings.com, December 2022

Informal DOL Guidance Addresses PEP Bonding Requirements

An information letter recently released by the Department of Labor addresses the application of ERISA's bonding requirements to a pooled employer plan established under the SECURE Act.

Source: Napa-net.org, December 2022

End-of-Year 2022 Tips for Retirement Plan Sponsors

As a retirement plan sponsor, you have the fiduciary responsibility to look over your plan and part of looking over the plan is preparing for the future. This article is about what end-of-year planning you as a plan sponsor should be doing in maintaining and improving your retirement plan for the coming new year.

Source: Jdsupra.com, December 2022

SECURE Act 2.0 and Your Company's Retirement Plan

This legislation aims to fill the existing gaps in the current retirement system for workers. First, while many workers are saving, they realistically will outlive their savings without lifetime income, which leads to the so-called "guarantee gap." Second, workers are not saving enough to last multiple decades into retirement, which results in the "savings gap." Finally, the "access gap" arises from insufficient workers having access to employer-sponsored plans.

Source: Hallbenefitslaw.com, December 2022

DOL's Final ESG Rules Reflect Warmer Attitude Toward ESG

Although the final rules are warmer to ESG considerations than the 2020 Regulations, they retain ERISA's bedrock principle that an ERISA fiduciary cannot sacrifice investment returns or assume greater investment risk to promote collateral objectives. The final rules also retain the core principle that a fiduciary's responsibility concerning investment management includes the management of appurtenant shareholder rights, such as voting proxies.

Source: Erisapracticecenter.com, December 2022

DC Solutions Look Beyond Yield for Retirement Income

This paper explores how inflation and interest rates impact retirement plan investing when the goal is income generation, rather than asset growth. It examines the impact to current, prominent income-generating strategies and explores approaches to retirement income generation that have begun gaining the attention of fiduciaries and plan sponsors as new tools to help retirees.

Source: Dciia.org, December 2022

DOL Issues Final Regulations on Prudence and Loyalty in Selecting 401k Plan Investments: ESG Funds Get a Thumbs-Up

Broadly stated, the new rule generally permits retirement plan fiduciaries, such as 401k plan sponsors, to consider ESG factors when selecting investment options, as well as when exercising proxy voting and other shareholder rights in connection with any plan-held securities. The Final Regulations represent the latest in a continuing saga of changing views and directives regarding ESG funds on the part of the DOL, often in response to changing political winds.

Source: Compliancedashboard.net, December 2022

Work Retirement Study Shows Plan Sponsors Prioritizing 401k Plan Design

Morgan Stanley released new research from its workplace retirement study that highlights retirement plan sponsors are prioritizing 401k plan design amid challenging economic and jobs environment. While the 401k plan continues to be an essential workplace benefit to attract and retain talent, plan sponsors emphasized the need for an attractive plan with a range of features to meet the evolving financial needs of a diverse workforce.

Source: Businesswire.com, December 2022

DOL Proposes Changes to ESG Investing and Shareholder Rights: What Plan Sponsors Need to Know

This article provides an update on the DOL's proposed rule and seeks to help plan sponsors understand their potential new responsibilities when considering ESG investments.

Source: Berrydunn.com, December 2022

How Does Local Cost-of-Living Affect Retirement?

Households across the United States face very different cost-of-living, largely due to variations in housing expenses. Wage levels directly affect retirement security through Social Security benefits. As a result, households in high-cost areas could face a replacement-rate penalty if their employers offer higher wages. The questions are: 1) How large is this penalty in practice? and 2) Do workers respond to the penalty by adjusting their behavior?

Source: Bc.edu, December 2022

Nearly 1 in 3 Gen Z Workers Are Not Actively Saving for Retirement

A stunning 31 percent of Generation Z workers have saved nothing for retirement over the past two years or so, according to a recent Bankrate survey. The move could ultimately cost them hundreds of thousands in retirement savings and expose them to one of America's top financial regrets, not saving for retirement early enough.

Source: Bankrate.com, December 2022

Wait, SECURE 2.0 Might Not Pass?

Senator Ben Cardin, D-Maryland, expressed concern that the SECURE 2.0 retirement reform legislation might not pass this year while speaking at the Employee Benefit Research Institute Retirement Summit on Thursday. The legislative package may be running out of time, suggested Senator Cardin. Cardin participated in an online discussion with retiring Senator Rob Portman hosted by Eric Stevenson, president of Nationwide Retirement Plans.

Source: Planadviser.com, December 2022*

DC Plan Sponsors Prevail in Two Recent Stock-Drop Rulings

Two different federal appeals courts recently upheld the dismissal of lawsuits challenging the prudence of employee stock ownership plan offerings in DC plans. Both of these stock-drop cases involved allegations that plan fiduciaries -- who were corporate insiders privy to nonpublic information about the sponsor -- breached their ERISA duties by failing to take appropriate action based on that information. In each case, the court ruled that plaintiffs hadn't met the pleading standard set by the Supreme Court in Fifth Third Bancorp v. Dudenhoeffer.

Source: Mercer.com, December 2022

Federal Judge Dismisses Two of the BlackRock TDF Suits

Two of the suits challenging the prudence of plans holding the BlackRock Lifepath target-date funds were dismissed recently. The suits were both dismissed by U.S. District Judge Michael S. Nachmanoff following oral arguments, reportedly rejecting the arguments that the BlackRock funds could be compared with the so-called "comparator" funds without considering different strategies, glide paths, and investments.

Source: Napa-net.org, December 2022

DOL Suggests Changes to Its Voluntary Fiduciary Correction Program and Related Exemption

November 18, 2022, the DOL released a number of changes to its Voluntary Fiduciary Correction Program in both an update of VFCP and related guidance. These changes represent the first modifications to the program in over 15 years.

Source: Groom.com, December 2022

Hot topics for Defined Contribution Plans

This 8-page publication highlights recent and ongoing issues and developments that are relevant to defined contribution plan sponsors. Highlighted are fundamental areas in plan design and administration, participant engagement, compliance and risk, and investments.

Source: Buck.com, December 2022

New DOL Proposal Would Allow Fiduciaries to Self-Correct Certain Errors

The DOL has proposed a rule, released on November 21, that aims to simplify and expand its Voluntary Fiduciary Correction Program. If adopted, the rule new would allow fiduciaries to self-correct for participant contributions that are not invested or participant loan repayments that are not repaid and then notify the DOL after the fact. Other erroneous transactions must continue to be fixed under current rules.

Source: Plansponsor.com, December 2022

Momentum is Growing to Educate Advisers on Plan Options for Lifetime Income

Three years after the "Setting Every Community Up for Retirement Enhancement Act" made it easier for companies to add annuities to their retirement plan options, the momentum is growing for educational programs in this area that are tailored to the needs of advisers. Retirement industry groups are ramping up efforts to help advisers understand and compare annuities for plans and consider how to communicate those options to plan sponsors and participants.

Source: Planadviser.com, December 2022

ERISA Fiduciaries May Consider ESG Factors in Selecting Investments and Exercising Shareholder Rights

This final rule effectively overturned two rules published in the last months of the Trump administration, which essentially prohibited the consideration of ESG factors when ERISA fiduciaries selected investments or exercised shareholder rights. In effect, the Biden administration has now enabled fiduciaries managing ERISA funds to consider "factors [that] may include the economic effects of climate change and other ESG considerations on the particular investment or investment course of action."

Source: Mintz.com, December 2022

DOL Finalizes ESG, Proxy Voting Regulation

The DOL recently finalized a regulation amending the rules under ERISA, related to the selection of plan investments and the exercise of shareholder rights. The Rule -- entitled "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights" -- is largely consistent with historic DOL positions, but it endeavors to provide fiduciaries with more latitude when considering environmental, social, and governance investment factors and voting proxies.

Source: Groom.com, December 2022

The Retirement Income Challenge in 401k Plans: Overcoming Legal Obstacles

Many participants in 401k plans would benefit from guaranteed retirement income to protect them from risk factors. Before the SECURE Act, perceived fiduciary liability and practical constraints were barriers to the inclusion of guaranteed retirement income contracts in 401k plans. The enactment of the SECURE Act, with its fiduciary safe harbor, its expanded distribution option to address portability, and the requirement to educate participants on the retirement income their accounts will provide, has been a significant step in removing those barriers.

Source: Dciia.org, December 2022

The DOL Issues its Final Word on ESG and Proxy Voting

The final regulations create a framework within which an ERISA fiduciary may take ESG into account in a manner that complies with ERISA. They largely track the DOL's proposed regulations issued in October 2021 with two notable additions.

Source: Debevoise.com, December 2022

For Second Consecutive Year, IRS 2022 Required Amendments List Does Not Affect 401k Plans

On November 21, 2022, the IRS released Notice 2022-62, its annual list of required amendments for individually designed qualified retirement plans, including 401k plans. Notably, for the second consecutive year, the RA List contains no provisions directly applicable to 401k plans and, in fact, contains no changes affecting retirement plans at all.

Source: Compliancedashboard.net, December 2022

Roth 401k Remains Underutilized Despite Potential Benefits

A well-designed Roth 401k may be an attractive option for many plan participants, and it is important for plan sponsors considering such a feature to design the plan with the needs of their workforce in mind. It is also critical to communicate the differences between the pre-tax option, the specific timing rules required, and the tax-free growth it offers. Additionally, plan sponsors should be mindful of potential administrative costs and other compliance requirements in connection with allowing the Roth option.

Source: Berrydunn.com, December 2022

2022 Required Amendments List Includes No Changes in Qualification Requirements

While this year's IRS Required Amendments List does not specify changes, that does not necessarily mean that 401k plan sponsors have no amendments to adopt. The RA List does not cover discretionary plan amendments, which generally must be adopted by the end of the plan year in which discretionary plan design or operational changes are implemented, except for certain discretionary amendments that must be adopted before they are implemented.

Source: Thomsonreuters.com, December 2022

DOL Proposes to Amend Its Voluntary Fiduciary Correction Program

The proposed amendment and restatement of the VFC Program and related PTE 2002-51 to incorporate self-correction of the transmittal of delinquent contributions and loan repayments is a mixed bag at best. Although delinquent contributions are the number one failure corrected through the VFC Program, the $1,000-or-less limit on lost earnings may limit the self-correction component's utility.

Source: Thomsonreuters.com, December 2022

DOL Final Regulations Authorize Plan Fiduciaries to Consider Climate Change and Other ESG Factors

The final regulations purport to clarify that fiduciaries may consider the potential financial benefits of ESG funds when selecting investments and that doing so may not violate ERISA. However, it is unclear whether this will be the case in operation.

Source: Thomsonreuters.com, December 2022

DOL Reframes ESG Investing and Proxy Voting for ERISA Fiduciaries

The Final Rule clarifies that ERISA-regulated fiduciaries may take into account ESG factors that are relevant to an investment's expected risk return and other financial factors. While the Final Rule gives a thumbs up to ESG investing in certain circumstances, when considered against the proposed version of the rule published by the DOL in October 2021, it deemphasizes ESG factors specifically and instead provides a more principles-based gloss on appropriate fiduciary decision-making processes in general.

Source: Morganlewis.com, December 2022

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