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COLLECTED WISDOM™ for Plan, Retirement, and Investment Committees

Most would agree the plan fiduciaries must establish investment and plan committees that will clearly define a process of plan administration. However, the only thing worse than not having a committee is having one that doesn't know what it's doing or never follows its own rules. Learn more from these resources.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

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Other topical areas you may find of interest that are not fully covered here include ERISA 404(c) Compliance and Fiduciary Duty and Fiduciary Responsibility and Liability Issues.

Practical Tips for Plan Sponsors and ESG Investments

Regulatory and legislative developments continue to accelerate around investments incorporating ESG factors into retirement plans. Plan sponsors and fiduciaries should take note of the fast-changing landscape when selecting and monitoring investment options. Groom Law Group's Jacob Eigner outlines what asset managers need to know about incorporating ESG factors in their investment processes. This includes compliance steps and how firms can build processes to avoid lawsuits from stockholders and the government.

Source: Bloomberglaw.com, September 2022

What You Need to Know About Retirement Plan Committees

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

Source: Jdsupra.com, August 2022

Risk Literacy and Why Your Committee Should Consider It

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

Source: Planpilot.com, August 2022

401k Plans and Crypto

Due to the growing popularity of and attractive returns on cryptocurrencies, 401k participants are urging plan fiduciaries to permit these investments. However, crypto investment can be an unpredictable ride. Whether this volatility can be squared with fiduciary duties imposed by ERISA needed clarification. ERISA's fiduciary duties have been described as the "highest known to the law." Fiduciaries wrestle with related issues including: Should crypto be part of the core investment menu available to all plan participants? Do fiduciaries have an obligation to limit crypto investment even in a plan's self-directed brokerage option?

Source: Fisherphillips.com, July 2022

Crypto in 401k Plans: a Plaintiff Lawyer's Dream?

The prospect of 401k plans adding cryptocurrency to their plan menu is like waiting for "fruit to ripen," according to a plaintiff's lawyer who spoke as part of a July 26 "Lessons from Litigation" panel at the 2022 NAPA D.C. Fly-In Forum. Attorney Mark Bokyo, a Partner with Bailey Glasser LLP, explained that anything which exposes participants to that level of risk, particularly when there's no real way to measure expected return moving forward, is not something that he would put in his plan. "I think the DOL's publicly stated position was carefully worded to just say, 'Hey, do your jobs if you're going to consider adding this.' The fact that participants want it is not a reason to do so any more than adding a lottery ticket fund would be," he noted.

Source: Napa-net.org, July 2022

Hughes v. Northwestern University: A Message to Fiduciaries From the Supreme Court

"That reasoning was flawed." With those four words, the Supreme Court of the United States reaffirmed that retirement plan fiduciaries' responsibilities apply independently to each investment option. Offering a lot of investment options does not eliminate the responsibility related to each of them. Offering some cheap investment options does not excuse expensive ones. Offering some stronger performers does not excuse poor performers. The bad stuff is not okay simply because there's also some good stuff. This 12-page paper underscores why plan fiduciaries must take notice of this ruling.

Source: Qualifiedplanadvisors.com, July 2022

Congressional Research Service Report: Cryptocurrency in 401k Retirement Plans

Digital assets, which include cryptocurrencies, crypto-assets, or digital tokens, among others, are digital representations of value and are issued and transferred using distributed ledger or blockchain technology. Bitcoin, Ethereum, and Dogecoin are among the most well-known cryptocurrencies. A November 2021 Pew Research Center and a March 2022 NBC News poll found that around one-fifth of Americans indicated that they had invested, traded, or otherwise used cryptocurrency. In recent months, policymakers have paid increasing attention to the prospect of defined contribution pension plan participants being able to invest in cryptocurrency.

Source: Congress.gov, July 2022

Cybersecurity in the Committee Room

Cybersecurity is not merely a technology issue. For that reason, fiduciary committees must understand they have a legal duty to protect the personally identifiable information, personal health information, and assets of their employee benefit plans from exposure and to protect electronic systems from exploitation by hackers. Read how some fiduciary committees address the challenge.

Source: Rolandcriss.com, July 2022

Key Considerations for Committees Seeking DC Plan Help

Plan sponsors have the tremendous responsibility of being stewards of DC plan assets on behalf of their participants. Adding to the level of responsibility is the increased fiduciary scrutiny of legislators and regulators, as well as the ongoing evolution of the retirement landscape. It is no wonder that nearly 59% of plan sponsors use an advisor. This article offers a series of themes to help committees assess a DC plan consultant partner and select one that will enhance your plan's oversight activities.

Source: Planpilot.com, May 2022

Collective Investment Trusts and Good Governance Considerations/a>

This 14-page paper explores relevant portions under each of the three legs of the regulatory triad. In particular, it examines the regulatory emphasis on the central role that good CIT governance -- in the form of well-designed and implemented bank-maintained processes and procedures -- plays in the ongoing management and operation of CITs. It also addresses and discusses how regulatory considerations inform CIT governance policies and may be reflected and implemented through good governance practices.

Source: Wilmingtontrust.com, March 2022

What Trends Are Impacting DC Plan Investment Menus?

NEPC is out with its 2021 Defined Contribution Plan Trends and Fee Survey, examining current plan investment trends and innovations across major sectors. While target-date funds continue to be the "turnkey solution," NEPC notes that one of the more prominent developments is that menus are moving toward index funds. In 2021, 44% of respondents had plan assets invested in TDFs, compared with 28% in 2011. In addition, 97% of plans offer TDFs and 95% of 2021 respondents are using TDFs as the plan default.

Source: Asppa.org, March 2022

DOL Warns 401k Plans Against Allowing Crypto Investments

The DOL is warning 401k plan fiduciaries to "exercise extreme care" before considering whether to include a cryptocurrency option in a plan investment menu. The sternly worded guidance, in Compliance Assistance Release No. 2022-01, published March 10, reveals heightened skepticism of 401k cryptocurrency investments and predicts new DOL enforcement activity for fiduciaries who permit participants to invest in cryptocurrencies.

Source: Shrm.org, March 2022

DOL Threatens to Investigate Fiduciaries Over Cryptocurrency in 401ks

Compliance Assistance Release No. 2022-01 is a significant departure from DOL's established regulatory norms. The author states that they are not aware of any other instance in which DOL has made such sweeping statements about the potential prudence of an entire asset class. DOL has recently elected to back away from proposals to create special standards for specific asset classes. However, in the Release, DOL implies that the agency will presume that fiduciaries making cryptocurrencies available have acted imprudently.

Source: Groom.com, March 2022

DOL Issues Big Caution on Crypto

The DOL has published compliance assistance for 401k plan fiduciaries considering plan investments in cryptocurrencies, in an effort aimed at protecting the retirement savings of U.S. workers. Compliance Assistance Release No. 2022-01 cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401k plan's investment menu for plan participants.

Source: Asppa.org, March 2022

Alternative Investments in Participant Directed Individual Account Plans: The Treatment of Private Equity Sleeves

While the plan asset issue continues to be a significant one concerning investments in private equity funds, recently the focus has been upon 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, March 2022

Are DOL ESG Tactics Backfiring With the 401k Fiduciary?

What the DOL's new ESG rule doesn't do is solve the real problem with ESG, namely that there's no consensus on what it means. This can have ramifications for plan sponsors and all 401k fiduciaries. Because of this, many are asking, will fiduciary liability increase?

Source: Fiduciarynews.com, March 2022

The Investment Policy Audit

Not to be confused with a financial audit performed by a Certified Public Accountant, an audit of an IPS examines the execution of the process defined in the IPS but does not address investment or financial outcomes. While the extent of the controls over the investment decision-making practices of fiduciary committees differs somewhat among ERISA plan sponsors, the tests applied to each evaluation focus on standard criteria in an audit. Those criteria include due diligence concerning the selection of money managers, adherence to the IPS specifications, and documentation of the monitoring activities.

Source: Rolandcriss.com, February 2022

DC Plan Investment Menu Evolution Continues

One telling stat identified in new NEPC research is that managed account adoption has remained stagnant for several years now, while index-based target-date funds have grown in popularity.

Source: Planadviser.com, February 2022

Alternative Investments in DC Plans

This comprehensive overview, in slide-deck format, covers the investment case for private real estate, hedge funds, and private equity, with a focus on what's new in terms of the offerings available for each type of alternative and how can each type of alternative add value as an investment in a DC plan? It also examines related opportunities, considerations, and challenges. The final pages cover potential next steps for fiduciaries interested in implementing alternatives.

Source: Asppa.org, February 2022

Supreme Court Clarifies ERISA Fiduciary's Duty of Prudence

The decision in Hughes makes clear that merely providing investors with a broad menu of investment options does not excuse a fiduciary's allegedly imprudent decisions. A retirement plan that includes prudent investment options alongside imprudent options may be insufficient because a fiduciary must protect investors by continually monitoring and removing those imprudent investments. This duty is not discharged simply because investors have the choice to select their investments.

Source: Paulweiss.com, January 2022

The Inclusion of Alternative Assets in DC Plans: What Are the Opportunities and Challenges?

Interest in including private investments in DC plans continues to grow as plan sponsors look for ways to improve participant outcomes by offering alternative diversifiers. On November 10, 2021, four leading industry associations collaborated on a webinar that brought together several industry experts to discuss their experience with adding alternative options to DC plans.

Source: Georgetown.edu, January 2022

Practical Implications of DOL's Latest Private Equity Statement

The DOL's supplemental statement is a tonal shift rather than a substantive change that reflects the continuing courtship for defined contribution plans and private equity investments. For plan sponsors, the clarifying statement's practical implications were to reaffirm that the duties of plan fiduciaries must be executed prudently and that they must always act in the best interest of participants and beneficiaries.

Source: Plansponsor.com, January 2022

ESG Investing for Retirement Plans: Where We've Been, and Where We Are Now

Over the past year, the regulatory backdrop around environmental, social, and governance investing has shifted. As McDermott Partner Brian J. Tiemann explains in these slides, the DOL under the Trump administration dropped ESG terminology and set a high standard for considering factors other than purely financial projections for investment alternatives. However, the Biden administration's DOL has said that it will not enforce Trump-era regulations or pursue enforcement actions against plan fiduciaries for failure to comply with those regulations.

Source: Employeebenefitsblog.com, December 2021

DOL Clarifies Its Prior Guidance on Private Equity Investments in 401k Plans

The DOL issued the Supplementary Statement in response to concerns from unidentified stakeholders that the Information Letter could be viewed -- particularly by sponsoring employers and other plan-level fiduciaries in typical 401k-type plans -- as endorsing or recommending PE investments and not sufficiently emphasizing the risks that accompany such investments.

Source: Debevoise.com, December 2021

DOL Clarifies Guidance on Private Equity in 401k Plans

A supplemental statement released by the Department of Labor cautions that private equity investments in participant-directed retirement savings plans may not be appropriate in certain cases. The Dec. 21 statement from the DOL advises that except in a minority of situations, plan-level fiduciaries of small, individual account plans are not likely suited to evaluate the use of private equity investments in designated investment alternatives in individual account plans.

Source: Asppa.org, December 2021

401k Annual Administration - A Checklist for 2022

A checklist can serve another important purpose, monitoring your 401k provider's job performance. As a 401k fiduciary, you can't simply assume your 401k provider is doing their job. You must "monitor" them to ensure they're doing a competent and timely job. A checklist can make monitoring easy.

Source: Employeefiduciary.com, December 2021

Real Estate Investments Increasing in DC Plans

A new report suggests defined contribution plan investors have grown more sophisticated in their knowledge of the real estate asset class and many are looking closer at asset-level and manager performance.

Source: Plansponsor.com, December 2021

CITs Continue Taking Over in 401ks, but the Change Isn't Always Easy

Investment providers launched just one target-date mutual fund series in the U.S. in 2020, while six pulled the plug on them, marking the second year in a row that the number of products on the market went down. Behind that trend, according to data from Cerulli Associates, is the rise of collective investment trusts, or CITs. The products, which are sponsored by banks or trust companies, function similarly to their mutual fund corollaries but don't have the same reporting requirements.

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

Continuous Improvement Through Investment Menu Review

This advisor suggests investment menus be reviewed periodically, typically bi-annually. Regular reviews of the investment menu design ensure that committees are continuously working to improve and challenge their process and incorporate current research. This case study examines the investment menu design review.

Source: Multnomahgroup.com, November 2021

The DOL's Proposed ESG Rule: A Retirement Committee Perspective

A recently proposed DOL regulation entitled "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights" addresses the duties of retirement plan fiduciaries when considering economically targeted investments, i.e., investments that take into account environmental, social, and governance factors. Issued in response to a May 20, 2021, Executive Order, the Proposal would significantly modify prior, Trump-era rules on the subject. This article examines the proposal from the retirement committee perspective.

Source: Mintz.com, November 2021

Benchmarking Your Retirement Plan Committee

While there is no perfect number of committees or committee members, their construction, monitoring, and maintenance are critical to their effective operation, as is the design of the plan functions they oversee. Little wonder that over the years, Plan Sponsor Council of America members have been curious as to the experience of other organizations, how and how often these bodies are benchmarked, how many and who participate, as well as how often they convene to comply with those needs. In response to these inquiries, PSCA conducted a snapshot survey in April 2021 to answer these questions. PSCA received responses from 255 plan sponsors representing a range of industries and plan sizes.

Source: Napa-net.org, November 2021

DOL Proposes Rule Encouraging ESG and Proxy Voting, Reducing Documentation Requirements

The proposed rule would largely retain the basic framework of the investment duties regulation while reinstating guidance similar to the sub-regulatory framework that existed immediately before the 2020 rules. For example, the proposed rule retains two longstanding principles. First, the duties of prudence and loyalty require ERISA plan fiduciaries to focus on material risk-return factors and not subordinate the interests of participants and beneficiaries to objectives unrelated to the provision of benefits under the plan. Second, the fiduciary act of managing plan assets includes making decisions about voting proxies and exercising shareholder rights. While the framework is the same, the proposed rule would include changes that seem likely to result in greater leeway for fiduciaries to include ESG investments in plans.

Source: Groom.com, October 2021

ESG Would Get Massive Boost From DOL Proposed 401k Rule

A proposed rule issued Wednesday by the DOL bodes extremely well for ESG investment managers, especially because the regulator clarified that target-date funds and other default products that use the investment criteria are permissible in 401ks. But the DOL went a step further, noting that it is retaining the so-called "tie-breaker" test for investments, meaning that all else being equal, financially immaterial factors can give one product an edge over another. The proposal also clarifies that ESG can be material when it comes to proxy votes that plan sponsors make on behalf of participants.

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

Labor Department Issues ESG Rule Proposal for 401ks

The DOL has issued its much-anticipated rule for the use of ESG investments in retirement plans, effectively walking back two Trump-era rules that were finalized last year. In the single rule proposal, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," the DOL would modify requirements outlined in the two rules from last year, "Financial Factors in Selecting Plan Investments" and "Fiduciary Duties Regarding Proxy Voting and Shareholder Rights."

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

DCIO Service Providers Report Significant Momentum

The average defined contribution investment-only provider's assets under management rose 30% over the 12 months leading up to June 30, aided by market gains of around 10% in just the first half of 2021, according to a new Sway Research survey. The analysis is based on surveys and interviews with 21 DCIO sales leaders and DC plan intermediaries. It shows that not all the AUM growth is the result of increasing stock prices, as two-thirds of the managers captured positive net sales during the first half of this year.

Source: Planadviser.com, October 2021

Department of Labor Teases Cryptocurrency Interest

Hinting that the DOL is currently working on guidance related to cryptocurrency, the Acting Assistant Secretary for the DOL's Employee Benefits Security Administration recently commented that the DOL finds the prospect of cryptocurrency investments in 401k plan lineups "troubling." This may be a sign of DOL focus on the increasing frequency of ERISA plan investments in cryptocurrency vehicles, including funds with cryptocurrency exposures.

Source: Morganlewis.com, October 2021

Retirement Plan Committees and Inclusivity

Experts say elevating diversity and closing inclusivity gaps are an absolute must for any successful organization. Studies show that when employees think their organization is committed to and supportive of diversity and inclusion, companies report increases in the ability to innovate, responsiveness to changing customer needs, and team collaboration. This article investigates whether the same is true for retirement plan committees.

Source: Captrust.com, September 2021

Five Plan Committee Missteps

There is frequently a difference between doing what the law requires and doing everything that you could do as a plan fiduciary. That said, there are things that plan fiduciaries must do, and things that, while not required, can keep the plan, and plan fiduciaries out of trouble. Here are five of those latter things.

Source: Napa-net.org, September 2021

ERISA and the Challenges of Using ESG in Retirement Plan Investing

It can be helpful for employers and retirement plan fiduciaries to understand the ERISA issues created by using ESG criteria in selecting and managing retirement plan investments, including why this remains an area of changing legal standards, especially in the last few years. This 2-page piece looks at the issues.

Source: Morganlewis.com, September 2021

Six Things Employers Need to Know Before Offering Cryptocurrency in 401ks

Cryptocurrencies are currently one of the hottest topics in the world and for good reason. Bitcoin's fluctuations over the past year have some employees and retirees asking to include cryptocurrencies in their employer-sponsored 401k retirement plans. The potential for negative valuation swings, on the other hand, has others saying they might be too risky for retirement savings. This Insight will provide six key considerations for Plan sponsors before considering including a cryptocurrency option in your retirement plans.

Source: Fisherphillips.com, September 2021

Keeping Retirement Plan Committees "In-Shape" With Fiduciary Training

The expertise and overall fitness of your organization's retirement plan committee are dependent upon their level of training: in this case, fiduciary training. Find out who should be included in this training, what it should cover and why, and how often fiduciary training should take place.

Source: Francisinvco.com, September 2021

Here's What Many Retirement Plan Committees Have in Common

Although retirement plan committees can be as varied as the companies that sponsor them, they often are similar in structure and approach. The Plan Sponsor Council of America recently surveyed retirement plan sponsors to learn what their committees have in common. This article briefly reviews the commonalities.

Source: Voya.com, September 2021

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

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

Source: Euclidspecialty.com, August 2021

Tips for Plan Committee Best Performance

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

Source: Ntsa-net.org, August 2021

The Value vs. Growth Debate and Its Impact on DC Plans and Participant Behaviors

This 6-page paper reviews notable differences between growth and value investing and evaluates the recent performance trends while providing historical context. It also explores how the recent outperformance of growth investing compared to value investing impacts defined contribution plans and plan participant behavior. Finally, it provides conceptual arguments that support the cases for growth and value investing on a forward-looking basis.

Source: Sageviewadvisory.com, July 2021

How to Know When It's Time to Update Your Investment Options

As the plan sponsor, it's your fiduciary responsibility to make sure your plan funds reflect the best interests of your participants. This usually requires regular monitoring of your investment fund menu and making updates as you see fit. With that in mind, here are three signs it may be time to add or replace investment options in your company's retirement plan.

Source: Planpilot.com, July 2021

Hiring an Investment Manager? Go Beyond the RFP Responses

Retirement plan sponsors and committees that are fiduciaries often ask for guidance when hiring investment professionals. The best practice is to do a formal request for proposals that target likely candidates for the job. The RFP will identify the most qualified candidates, but other, less objective factors will differentiate them.

Source: Rpaconvergence.com, July 2021

How to Make Your Investment Committee More Effective

Would you like your investment committee to utilize best practices and produce better outcomes? This is a rundown from a recent episode of a podcast from Fiducient Partners that should prove insightful. Ten Habits of Effective Investment Committees is based on what the author has gleaned over the years from observing many well-run investment committees.

Source: Fiducientadvisors.com, June 2021

What Advisers Would Like Plan Sponsors to Better Understand

Retirement plan sponsors need to be knowledgeable about their investment lineups and deliver documentation to the DOL and IRS on time. Most retirement plan committee members already know this. However, there are some things that advisers and consultants wish their sponsor clients were better at, or that they prioritized more.

Source: Plansponsor.com, June 2021

Essential Considerations for DC Plan Investment Lineups

Before evaluating investments for inclusion on a DC plan fund lineup, plan sponsors need to decide what types of investments they want to use. The purpose of a retirement plan and the demographics of its participants will help plan sponsors decide what types of investments they need to use to take participants from accumulation to decumulation.

Source: Planadviser.com, June 2021

New Research From PSCA Illuminates Common Plan Committee Practices

If there was ever a meeting that couldn't be replaced with an email, it's that of a retirement plan committee, and while those structures are as varied as the companies that sponsor them, a new survey by the Plan Sponsor Council of America uncovers some key consistencies in structure and approach. Indeed, retirement plan committees have always been an essential element in assuring prudent retirement plan operation and administration. While there is perhaps no perfect number of committees -- or committee members -- their construction, monitoring, and maintenance through rotations and training are as critical to their effective operation as it is to the design of the plan functions they oversee.

Source: Psca.org, June 2021

Requesting Plan Documents: What's Included?

A participant has requested copies of plan committee meeting minutes and notes for the last four quarters. Does the committee have to comply with this request?

Source: Retirementlc.com, May 2021

Updating Your 401k Retirement Plan Committee's Responsibilities

If you are like many 401k plan sponsors, you worry about whether your retirement plan committee is using its time wisely talking about what is important? The author believes that your retirement plan committee should focus on six main areas which are reviewed here.

Source: Lawtonrpc.com, May 2021

Does the Recently Amended Investment Duties Regulation Change How Fiduciaries Are Expected to Make Investment Decisions

The final rule on investment decision-making that emerged from the filter of constituent comments does not prohibit fiduciaries of ERISA employee benefit plans from selecting investments that have ESG or other collateral objectives or benefits and does not create different standards for consideration of such investment options. Rather, the amended regulation requires that fiduciaries make investment choices based on consideration of pecuniary factors, which is consistent with the DOL's existing guidance. The final rule does, however, shift focus from considering investment options under the totality of the facts and circumstances to considering only defined pecuniary factors to the exclusion of non-pecuniary factors. This could be a distinction without a difference, however, given the expanded interpretation in the preamble and the flexibility incorporated into the final regulatory language.

Source: Wagnerlawgroup.com, April 2021

DOL's Non-Enforcement Policy for 401k ESG Investments

On March 10, 2021, the DOL announced in an official statement that it will not enforce its recently issued regulations on the investment of 401k plan investments based on nonpecuniary factors, such as environmental, social, and governance factors. The announcement represents an unusual, though not unexpected, change of course concerning the DOL's prior stated position on this issue. Generally stated, the DOL's March 10, 2021 announcement specifies that pending the publication of further guidance the DOL will not pursue enforcement actions against any plan fiduciary based on a failure to comply with the final regulations.

Source: Compliancedashboard.net, March 2021

DOL Won't Enforce Financial Factor, Proxy Voting Rules

A March 10 announcement by the Department of Labor's Employee Benefits Security Administration provides a precursor to the direction it plans to take on the recently finalized rules. Released as an enforcement policy statement under Title I of ERISA, the DOL advised that it will not enforce the final rules on Financial Factors in Selecting Plan Investments and Fiduciary Duties Regarding Proxy Voting and Shareholder Rights.

Source: Asppa.org, March 2021

A Checklist for Retirement Plan Committees

Given that there are so many considerations to weigh when overseeing a retirement plan, it is important for plan sponsors to have a checklist for their committees -- whether the sponsor has a single retirement plan committee or dual investment and administrative committees -- to cover in quarterly meetings. Experts discuss what main facets of a retirement plan that a committee should cover in its quarterly meetings.

Source: Plansponsor.com, March 2021

Evaluating Target-Date Funds Is a Fiduciary Responsibility

Many fiduciaries responsible for selecting their 401k plan's target-date funds don't understand how these funds work. The risk of staying ignorant is increasing. Lawsuits challenging target-date fund selection are on the rise, and plan fiduciaries need to be able to defend their choices in response to these suits. New products, such as target-date funds that provide lifetime income options or make private equity investments are becoming available. For all of these reasons, if target-date funds are included in a plan's investment menu, fiduciaries need to develop a prudent process for evaluating the funds in partnership with their investment professionals.

Source: Cohenbuckmann.com, March 2021

Three Takeaways From Intel Retirement Plan Leaders' ERISA Win

The status of alternative investments as viable options on 401k plan menus received a significant boost on Jan. 21, as a California federal judge granted defendants' motion to dismiss in the latest development in the closely watched Anderson v. Intel Corp. Investment Policy Committee case. For plan sponsors who have watched the recent 401k litigation wave progress with no sign of relenting in recent months, this decision comes as a welcome development as it should help raise the bar for plaintiffs looking to challenge these types of plan investment options. In addition, the court's opinion may provide a road map for changes to fiduciary decision-making processes that could limit the ability of plaintiffs to bring these types of cases.

Source: Ropesgray.com, February 2021

Does the Investment Duties Regulation Change How Fiduciaries Are Expected to Make Investment Decisions

The more things change the more they stay the same. Or do they? This question should be on every employee benefit plan fiduciary's mind after January 12, 2021, when an amended DOL regulation went into effect changing the standards under which fiduciaries are expected to make investment decisions for ERISA employee benefit plans.

Source: Wagnerlawgroup.com, January 2021

Establishing a Retirement Plan Committee

Plan sponsors need to establish who will be responsible for plan administration and plan and investment decisions. Committees aren't legally required, but if plan sponsors appoint a committee as a "named fiduciary," they will not only see it pay more careful attention to plan issues, but a company's owner or board of directors will be relieved of most responsibilities for the plan. Having a committee or committees can also greatly help with defense if a plan or plan sponsor is sued.

Source: Plansponsor.com, December 2020

Choosing a QDIA Under the Final Rule Governing the Selection of Plan Investments

The DOL issued a final rule that amends the long-standing regulations that govern the selection of retirement plan investments by fiduciaries. One of the provisions is a prohibition on the use of an ESG fund as a QDIA. Plan fiduciaries that choose a fund that involves ESG screening strategies are taking a risk that the fund is not a permissible QDIA.

Source: Boutwellfay.com, December 2020

CITs Are Sweeping Through the Retail 401k Market

At the 2020 InvestmentNews RPA Convergence CIO Roundtable and Think Tank, Jamie Battmer, chief investment officer for Resources Investment Advisors, said collective investment trusts were gaining so much momentum that "40 Act funds [in 401k plans] are going the way of checkbooks." There are many compelling reasons for this rather swift transformation in the retail 401k market. There are also still many questions about collective investment trusts, or CITs, but none of them seem to be show killers.

Source: Investmentnews.com (registration may be required), December 2020

New DOL Regulations Require Fiduciaries to Reevaluate ESG Investments

The DOL issued final regulations that, beginning on Jan. 12, 2021, require plan fiduciaries to only consider financial factors when selecting plan investments. While not specifically targeting Environmental, Social, and Governance investments, the regulations significantly alter the fiduciary process needed to support a plan's decision to offer them. Plan fiduciaries wishing to consider ESG factors when evaluating an investment can still proceed but should be cautious and careful to document their process.

Source: Lockton.com, November 2020

Why Fiduciaries Should Consider Outsourcing Plan Investment Responsibility

Plan sponsor fiduciaries who take a do-it-yourself approach to plan investments face huge potential exposure for underperforming investments and excessive plan fees. If you are a plan sponsor fiduciary who is losing sleep over all of this, it may be time to consider outsourcing your investment responsibilities to an investment manager or outsourced chief investment officer.

Source: Cohenbuckmann.com, November 2020

DOL Shifts Focus From ESG to Pecuniary Factors in Final Rule

The Final Rule requires that fiduciaries evaluate investment opportunities based upon pecuniary factors. However, if fiduciaries are unable to distinguish investments based on pecuniary factors, the Final Rule permits fiduciaries to consider non-pecuniary factors as a tie-breaker provided that they comply with the Final Rule's documentation requirement. Like the Proposed Rule, the Final Rule includes restrictive conditions for investments used as a plan's qualified default investment alternative. This article describes the Final Rule's key features, including notable differences from the Proposed Rule.

Source: Groom.com, November 2020

Should You Establish a Retirement Plan Governance Committee?

Retirement plan governance is the system through which key decisions are made about strategy and operations, including plan design, administration, and investment choices. Typically, at the core of plan governance is an official plan governance committee. Although the DOL and IRS do not require a plan to have a plan governance committee, it is considered a best practice to have one.

Source: Orba.com, November 2020

The Pecuniary Rule: A Roadmap for Navigating the DOL's Final Rule on Financial Factors in Selecting Plan Investments

The DOL has issued a final rule to revise its existing rule regarding financial factors in selecting plan investments. This article provides a roadmap for fiduciaries on the final rule along with a general discussion of the core concepts under the final rule and some of the key departures from the proposed rule.

Source: Bradley.com, November 2020

Final Rule on Financial Factors in Investing Sidesteps ESG Focus

The final rule on ESG investing by ERISA plans steps away from the proposed rule's focus on ESG. The DOL notes that "unlike the proposal, the final rule's operative text contains no specific references to ESG or ESG-themed funds." Rather, the DOL's position is that the lack of a precise or generally accepted definition of 'ESG' made ESG terminology inappropriate as a regulatory standard. Therefore, the final rule refers to "pecuniary factors and non-pecuniary factors" in defining the relevant fiduciary investment duties.

Source: Asppa.org, November 2020

DOL Final Regulations Regarding Financial Factors in Selecting Plan Investments

The Department of Labor is adopting amendments to the "investment duties" regulation under Title I of ERISA. The amendments require plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action.

Source: Americanbenefitscouncil.org, November 2020

DOL Announces Final ESG Rule

The Department of Labor announced a final rule that updates and clarifies the Department's investment duties regulation in 29 CFR 2550.404a-1. The final rule intends to provide clear regulatory guideposts for fiduciaries of private-sector retirement and other employee benefit plans in light of recent trends involving environmental, social, and governance investing.

Source: Dol.gov, October 2020

More DC Plans Are Using OCIOs

PGIM found that more defined contribution plan sponsors are hiring outsourced chief investment officers. Plan sponsors say they are looking to create an institutional-quality investment lineup because they lack the internal expertise to do so and to reduce their fiduciary risk.

Source: Planadviser.com, October 2020

Time to Catch Up on Those 401k Plan Committee Meeting Minutes

You got past another October 15 filing date for the Form 5500 for your 401k plan. Now you can focus on your 2020 plan year and start making sure you have your 401k plan house set for the end of this year. Keeping detailed minutes from the meetings of your 401k plan oversight committee is an important part of this process. Here are a few simple tips for keeping detailed and effective 401k committee meeting minutes.

Source: Linkedin.com, October 2020

Advisers Can Spearhead Retirement Plan Committee Setup and Training

When it comes to fiduciary training for retirement plan committees, experts generally say a plan adviser can take the lead and use the occasional help of an ERISA attorney. Plan sponsors can trust advisers to help with committee decisions and training.

Source: Plansponsor.com, October 2020

DOL Submits Final ESG Rule to OMB

Release of the DOL's final rule addressing environmental, social, and governance factors in selecting plan investments appears to be imminent. Following a 30-day comment window that ended July 30 and more than 8,000 comment letters, the DOL on Oct. 14 submitted a final rule to the Office of Management and Budget for review.

Source: Ntsa-net.org, October 2020

How to Diversify Retirement Plan Committees

This year, in particular, with the protests that sprung up across the country following the death of George Floyd, has shown many companies the importance of having a truly diverse workforce. And that principle should extend to the retirement plan committee as well as the workforce, experts say. With representation being top of mind in 2020, companies are reconsidering the makeup of their workforces and their retirement plan committees.

Source: Planadviser.com, October 2020

The Evolving DC Landscape: The Expanding Role of OCIOs

New research from PGIM sheds light on the use of outsourced chief investment officers by defined contribution plan sponsors. In a divergence of opinion, OCIOs seem to underweight their expertise in implementing institutional-quality structures, indicating that the top reasons for being hired by their clients were the perceived mitigation of fiduciary risk and the plan sponsors' lack of resources.

Source: Pgim.com, October 2020

Fiduciary Fuels 401k Rise in Outsourced Chief Investment Officers

While outsourced chief investment officers have historically been tapped by defined benefit plan sponsors and endowments, there is a growing trend of DC plan sponsors turning to OCIO managers. New research from PGIM research found the top reasons that plan sponsors are using an OCIO manager.

Source: 401kspecialistmag.com, October 2020

401k Investments - Options for Selecting a "Prudent" Menu

Most 401k providers have little incentive to help business owners to pick prudent investments for their 401k. The opposite may be true. They can grow their profits by steering business owners towards "imprudent" investments with excessive fees and/or inferior returns. If you're a business owner and want to avoid this trap, the article has two recommendations: 1) model your investment menu after the Federal Thrift Savings Plan, or 2) hire a fiduciary-grade financial advisor for professional investment advice.

Source: Employeefiduciary.com, October 2020

Back to Reality: The Role of Active Management in DC Plans

In this paper, the authors challenge five common misconceptions that have led to the increased prevalence of passive investments in defined contribution plans. To help fiduciaries weigh the pros and cons of active management, they perform a reality check on each misconception, referencing fiduciary principles, and market and participant survey data.

Source: Mfs.com, September 2020

ESG Investments and the Impact of Recent DOL Proposed Regulations on Retirement Plans - Podcast

Discusses the new set of proposed regulations from the DOL guiding retirement plan fiduciaries about investing plan assets in ESG Investment Vehicles. The group discusses what ESG investments are, what's different about considering them for retirement plans, what the DOL's proposed regulations will do, and what they wouldn't. Also talks about the reaction to the rules, how they impact retirement plans, and the next steps for plan fiduciaries.

Source: Ballardspahr.com, September 2020

DOL Proposed Regulation Highlights the Risks of ESG Investing for ERISA Fiduciaries

The DOL issued a proposed regulation outlining the duties of an ERISA fiduciary when considering an investment that incorporates environmental, social, and corporate governance factors. Some believe that the DOL will likely move quickly to finalize the regulation before the end of the current administration's first term. The proposed regulation would make five basic changes to the current regulation.

Source: Verrill-law.com, August 2020

American Airlines 401k Plan Not Required to Offer Stable Value Fund

Among the many claims brought by plaintiffs challenging investment offerings in defined contribution plans is the claim that plans should offer stable value funds instead of more conservative capital preservation funds, such as money market funds and deposit accounts that are insured by the U.S. government. Plaintiffs have argued that stable value funds are inherently better than more conservative options because they typically provide a higher rate of return. A federal district court in Texas recently dismissed this type of claim in a case brought against American Airlines.

Source: Erisapracticecenter.com, August 2020

Do 401k Menus Suffer From a Generation Gap?

A new whitepaper finds that the use of fixed income options in 401k plans has not kept pace with workplace trends. The whitepaper points out that in the past, investment recommendations may have been more focused on achieving minimum compliance and "checking the fixed income box" rather than anticipating participant investment needs at various life stages. A multi-generational participant population has more complex needs.

Source: Napa-net.org, August 2020

Review Investment Policy Statements for ESG Investment Compliance

As the DOL increases its investigations and inquiries into ESG investments held by retirement plans, plan fiduciaries should review their plan investments and policies to (i) determine if their retirement plans hold any ESG-type investments, and (ii) if they do hold such investments, (a) review their investment policy statements and evaluate whether such policies comply with the current rules for ESG investments, and (b) confirm whether such investments remain appropriate for the plan.

Source: Haynesboone.com, August 2020

DOL's ESG Proposal Blasted by Commenters

The DOL's proposed rule addressing environmental, social, and governance factors in selecting plan investments received more than 1,500 comment letters during the 30-day comment window, with many taking issue with the proposal.

Source: Napa-net.org, August 2020

DOL Provides Guidance for Private Equity Investments in 401k Plans

Employers that are fiduciaries of participant-directed individual account plans subject to ERISA should be pleased with the position taken by the DOL in an information letter dated June 3, 2020, addressing the use of private equity investments in designated investment alternatives offered in Plans. The DOL states that subject to the standards and considerations outlined in the letter, a plan fiduciary would not violate its duties under sections 403 and 404 of ERISA solely because the fiduciary offers a professionally managed asset allocation fund with a private equity component as a designated investment alternative in a plan.

Source: Workforcebulletin.com, July 2020

Cost Savings Seen As Main Force Behind 401k Shifts

Changes made to the investment lineups of corporate 401k plans in 2019 reflect U.S. sponsors' ongoing focus on cost savings, a Pensions & Investments analysis of recently released 11-K filings shows. Changes to index fund lineups among plans were prevalent, with many adding to their passive tiers or changing index fund providers, with Fidelity Investments seeing several wins and Vanguard Group seeing some losses.

Source: Pionline.com, July 2020

DOL Guidance on ESG Investing by Retirement Plans: Investment Committees Should Handle with Care

Retirement plan investment fiduciaries would be well-advised to note the increasing level of scrutiny the DOL is applying to ESG funds in retirement plans. Selecting or retaining ESG funds can be fraught with increased audit risk, including, potentially, imposing penalties for breach of fiduciary duty under ERISA. 401k and other defined contribution plans are at enhanced risk.

Source: Benefitslawadvisor.com, July 2020

DOL Proposes New Fiduciary Guidance for Selection of Socially Responsible Plan Investments

The proposed rule makes it clear that fiduciaries must select those investments based solely on financial considerations that impact the economic value of the investments. In other words, plan fiduciaries must not sacrifice performance or expose the plan participants and beneficiaries to additional risk by including investment options that primarily serve the non-financial interests of the plan fiduciaries.

Source: Icemiller.com, July 2020

A New Framework for Consideration of Private Equity in DC Plans

Alternative investments such as private equity can commonly be found in the investment portfolios of defined benefit plans. However, despite their potential strengths, there has not been wide adoption of private equity strategies in DC plans to date. To support the consideration of private equity by fiduciaries of DC plans subject to ERISA, the DOL issued an information letter to Groom Law Group. The information letter provides a framework for a prudent process for fiduciaries who believe a private equity allocation to a diversified plan investment option, including a target-date fund, may be appropriate.

Source: Groom.com, July 2020

DOL Releases Proposed Rule for Financial Factors in Selecting Plan Investments

The DOL released a proposed rule that will amend existing guidance governing a fiduciary's investment duties under ERISA. The proposed rule clarifies that plan fiduciaries must base their investment decisions solely on pecuniary factors: those that have a material effect on an investment's risk and return based on appropriate time horizons consistent with the plan's investment objectives and funding policy. In other words, plan fiduciaries must not sacrifice performance or expose plan participants and beneficiaries to increased financial risk to serve a non-pecuniary interest.

Source: Thompsonhine.com, July 2020

DOL Offers Guidance to Fiduciaries Considering Private Equity Investments in DC Plans

While the guidance does not establish any new fiduciary rules or exemptions, it is nonetheless quite helpful in providing factors to be considered by fiduciaries in determining whether investment vehicles with private equity components belong in their plan investment menu. The Information Letter considers facts relevant to private equity investments, but the guidance can be applied more broadly to consideration of any alternative investment vehicle with similar characteristics.

Source: Wagnerlawgroup.com, June 2020

DOL Information Letter Outlines Fiduciary Considerations for Including Private Equity in DC Plan Investments

The Letter emphasizes that selection and monitoring of an investment option with private equity are subject to the same fiduciary considerations as other investments (including the duties to be prudent and loyal, and the duty to avoid prohibited transactions). At a high level, this includes evaluating whether the potential upside from the investment justifies the added risk, fees, complexity, and valuation and liquidity issues. The Letter lists specific considerations.

Source: Erisapracticecenter.com, June 2020

DOL Guidance on Private Equity Adds Flexibility for DC Plans

Department's views on the use of private equity investments within 401k and other DC plans. The Information Letter was issued to Groom Law Group on behalf of two of its clients and makes clear that 401k fiduciaries can prudently include private equity as a component of an ERISA plan's diversified investment option, such as a target-date fund. The letter provides a framework of important factors for plan fiduciaries to consider to demonstrate the prudence of such investments.

Source: Groom.com, June 2020

New DOL Guidance on Private Equity Adds Flexibility for DC Plans

The DOL issued important new guidance for 401k plan investment committees on June 3 that want to include private equity as a component of a target-date fund or other diversified investment fund offered within a 401k plan. The Information Letter marks the first time DOL has addressed the use of private equity in defined contribution retirement plans.

Source: 401kspecialistmag.com, June 2020

Seven Strategies for Building a Strong 401k Committee

There is so much great information online to help you set up and manage a 401k committee. In the last several months alone there have been over 50 articles on committee best practices. To save you time, in this piece you'll find seven of the best articles for building a strong 401k committee filled with common (and not-so-common) strategies to consider.

Source: 401kbestpractices.com, March 2020

Retirement Plan Investment Committee Checklist

The fiduciary landscape is changing, and processes once seen as "good enough" no longer check all of the right boxes. Use this straightforward checklist to ensure the investment committee is covering its bases.

Source: Conradsiegel.com, March 2020

Building a Successful Investment Committee

The standards plan fiduciaries are held to seem to be rising. A critical step in meeting your fiduciary responsibility is to start an investment committee or strengthen your current one. The high-level investment committee basics here break down what a successful committee looks like.

Source: Conradsiegel.com, February 2020

Elements of Retirement Plan Committee Education

Training new retirement plan committee members, as well as providing ongoing training throughout the year for all members, is critical, industry experts say. "Because their responsibilities are so enormous, we need to do a better job of training these fiduciaries to make better decisions," says Joshua Itzoe, a partner and managing director with Greenspring Advisors. This article reviews some best practices.

Source: Plansponsor.com, January 2020


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