DOL Fiduciary Rule Hit With First Lawsuit
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In This Issue
Items of Special Interest to Advisers and Other Service Providers DOL Fiduciary Rule Hit With First Lawsuit The first of potentially many lawsuits against the DOL's fiduciary rule has been filed. The Federation of Americans for Consumer Choice, along with several independent insurance agents, filed a lawsuit on Thursday in the U.S. District Court for the Eastern District of Texas located in the city of Tyler, Texas. In a statement, the FACC says that by implementing a new Retirement Security Rule, the DOL has violated the Fifth Circuit's 2018 rule that had vacated the department's previous 2016 fiduciary legislation. Source: 401kspecialistmag.com DOL Acting Secretary Fends off Fiduciary Rule Attacks Before House Hearing A contentious congressional hearing that was billed as "examining the policies and priorities of the Department of Labor" ended with a member of Congress calling for the resignation of Acting Labor Secretary Julie Su. The hearing featured few, if any, questions about the SECURE 2.0 Act, and instead featured numerous questions and criticisms about the DOL's recently finalized fiduciary rule, as well as Su's service in an acting capacity. Source: Napa-net.org DOL Finalizes PTE 2020-02 Amendments This Groom Law Group article provides an overview of the amendments to PTE 2020-02. In addition to changing PTE 2020-02, DOL also changed the definition of investment advice and other exemptions, prompting financial institutions and distributors who had not previously used PTE 2020-02 to rely on it. Source: Groom.com DOL Finalizes PTE 84-24 Amendments Under the DOL's 2024 final Fiduciary Rule, insurance producers and other persons who recommend annuity and insurance products in transactions involving ERISA plans and IRAs are generally categorized as advice fiduciaries. These investment advice fiduciaries require relief from the prohibited transaction restrictions of ERISA and/or the Code to cover their receipt of commissions and other third-party paid compensation. Relief under PTE 84-24 is available to "Independent Producers" concerning fiduciary recommendations of annuities and other insurance products that are not "securities" under Federal securities laws. Source: Groom.com Advisers Compliant With Reg BI are Compliant With Fiduciary Rule, EBSA Says Ali Khawar, the principal assistant secretary for the Employee Benefits Security Administration, explained in a webinar on Monday that advisers compliant with the Securities and Exchange Commission’s Regulation Best Interest rule could use the same policies and procedures to comply with the newly finalized Retirement Security Rule. Source: Planadviser.com Fiduciary and Plan Governance Breaking Down ERISA Section 404(c): The Basics Although retirement plan participants have the freedom to make their own investment decisions, plan fiduciaries are still responsible for providing a wide range of diversified investment options for them to choose from. Fortunately, however, fiduciaries are protected by ERISA Section 404(c), a provision that shields plan sponsors from employees' poor investment choices. What are the requirements under 404(c)? Source: Plansponsor.com Advisor RFPs: The Ultimate Guide (Webinar Recording) As a retirement plan sponsor, advisor requests for proposals are a necessary part of fulfilling your fiduciary duty. They can also present a valuable opportunity to expand or change your retirement plan offerings. However, it's no secret that the RFP process can be daunting. In this webinar recording, CAPTRUST presents a step-by-step guide to aid you in planning, preparing, and executing this important body of work. Source: Captrust.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers Callan 2024 DC Trends Survey: Focus on Plan Governance, and Continued Efforts to Rein in Fees Callan's 2024 Defined Contribution Trends Survey covers the key tenets of DC plan management such as governance, investments, fees, plan design, and more. The insights distilled in the 17th annual edition of the survey provide a benchmark for sponsors to evaluate their plans compared to peers, and to offer actionable information to help them improve their plans and the outcomes for their participants. This article summarizes highlights from the survey, which was conducted online in late 2023. Source: Callan.com 401k Plan Asset Allocation, Account Balances, and Loan Activity in 2022 In an ongoing collaborative effort, the Employee Benefit Research Institute and the Investment Company Institute collect annual data on millions of 401k plan participants as a means of examining how these participants manage their 401k plan accounts. This 32-page report is an update of EBRI and ICI's ongoing research into 401k plan participants' activity through year-end 2022. The report is divided into three sections: the first presents a snapshot of participant account balances at year-end 2022, the second looks at participants' asset allocations, and the third focuses on participants' 401k loan activity. Source: Ebri.org »» Click here for More Studies, Research, and White Papers 403b Plans Top Considerations for 403b Plans in 2024 Sponsors of 403b plans have some new choices to consider in 2024. Under the SECURE 2.0 Act of 2022., plan sponsors can add new features to their 403b plans to increase opportunities for participation and access to retirement plan funds. Separately, the IRS recently expanded its determination letter program to include individually designed 403b plans. This affords plan sponsors who do not use a service provider's pre-approved plan document a helpful new avenue to seek approval of their 403b plans in written form. Source: Plansponsor.com »» Click here for More 403b Material Target-Date Funds DOL Final Fiduciary Rules Could Resolve Conflicting Interests in Target-Date Funds Target-Date Funds have three interest groups: investment managers, fiduciaries, and beneficiaries. The interests of these three groups are not aligned, but the new DOL fiduciary rules could change that. Ron Surz warns TDF participants will be the big losers in the next market correction unless they start using personalized target-date accounts. Source: 401kspecialistmag.com We Need New DOL Guidance on Target-Date Funds: GAO Target-date funds started strong only to vary more in investment performance and risk as they approach the specified retirement date, according to the Government Accountability Office, which asked the DOL to do something about it. The GAO called on the DOL to update its TDF guidance, which is over a decade old. Source: Napa-net.org »» Click here for More Target-Date Funds Material State-Based Private-Sector Retirement Programs Washington State's New State-Mandated Retirement Program On March 28, 2024, Washington State's Governor, Jay Inslee, signed into law a bill that creates a new state-run retirement program called "Washington Saves." Under the program, "covered employers" must give "covered employees" the opportunity to contribute a portion of their pay to an individual retirement account on a pre-tax basis to save for retirement. Source: Beneficiallyyours.com Cyber and Plan Security How Should a Plan Sponsor Respond to a Data Breach? The data breach incident that took place at J.P. Morgan Chase in February, impacting more than 451,000 plan participants, serves as an opportunity for plan sponsors to reflect on their cybersecurity practices and consider what action they would take if they found themselves in a similar situation. If you were a plan sponsor, who, for example, uses J.P. Morgan as its recordkeeper, and is notified of a breach in which participant information has been exposed, what should their plan of action be? Source: Plansponsor.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Maintaining Retirement Plan Records Employers who sponsor a retirement plan are required by law to keep books and records available for the Internal Revenue Service to review. Having these records available is also helpful when determining participant benefits. Records may be kept in either paper or electronic format, as long as they can be readily retrieved. This article reviews what records you should keep and how long you must retain them. Source: Consultrms.com Seven Common Plan Errors and How to Avoid Them Correctly maintaining a retirement plan comes with responsibilities and administrative duties to ensure compliance with the various complex employee benefit plan laws and regulations, making it important to have knowledgeable service providers and strong internal company controls. The IRS expects plan administrators and service providers to catch mistakes and correct them right away. In this article, the author discusses seven common mistakes and provides tips on how to keep them from happening. Source: Consultrms.com »» Click here for more Compliance and Regulatory Material Marketplace News Breach at J.P. Morgan Exposes Data of 451,000 Plan Participants Diversify Advisor Network Launches Retirement Plan Advisory Services
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