Fiduciary Fee Study
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In This Issue
Fiduciary and Plan Governance When fees are taken from 401k participant accounts, they directly decrease returns, resulting in less money available to grow over time. These fees can ultimately reduce a worker's retirement savings by hundreds of thousands of dollars and mitigate the success of offering a workplace plan. Fiduciary-grade investment advice can reduce the expenses of administering a 401k plan, including those of small businesses, according to a data deep-dive by Employee Fiduciary, LLC. Source: Planadviser.com Why Retirement Plan Sponsors and Fiduciaries Need to Know about the SEC Cybersecurity Amendments On May 15, 2024, the SEC adopted amendments to Regulation S-P which governs the treatment of nonpublic personal information about consumers by certain financial institutions, many of which are commonly vendors and service providers to retirement plans. When assessing the cybersecurity of a retirement plan service provider that is a financial institution, plan fiduciaries may want to be aware of these SEC requirements as part of their assessment process. Source: Workplaceprivacyreport.com TDF Fiduciary Hygiene: An Appropriate IPS, Customized Benchmarks, and Thorough Committee Minutes On May 20, 2024, the United States District Court for the Northern District of California dismissed the plaintiffs' complaint in Bracalente v. Cisco Systems, Inc., holding that defendant Cisco did not violate ERISA's prudence requirement in selecting (and retaining) a suite of BlackRock target-date funds as the Cisco 401k plan's qualified default investment alternative. This article reviews the court's decision, highlighting three issues of practical significance for sponsor fiduciaries. Source: Octoberthree.com Recent Developments in 401k Forfeiture Cases: Key Updates for Plan Sponsors This article reviews two significant developments in the arena of 401k forfeiture cases that could have far-reaching implications for employers and plan sponsors. These recent legal decisions underscore the need for vigilance and proactive management of plan documents and forfeiture practices. Source: Boutwellfay.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers Gender Lens in Defined Contribution Plans The adverse economic consequences of the pandemic disproportionally affected women. Women have dropped out of the workforce at record numbers to take on additional caregiving responsibilities. This study using, data from 2019 to 2023, shows that: Participation rates of women remain lower than those of men. Women and men contribute at the same rates. Women continue to invest more conservatively. However, both women's and men's allocations to equity have increased. Women continue to claim hardship at greater rates and have higher loan-to-balance ratios than men. 401k balances of women continue to lag behind those of men. Source: Bofa.com Are Employers Optimizing Their 401k Match? In this 19-page paper, Vanguard outlines three criteria that firms might consider in designing their retirement match schedules: 1. Equity: Are employer contributions equitably distributed? 2. Efficiency: Does the plan design encourage savings? 3. Cost: How costly is the plan? They suggest simple metrics that employers might use to evaluate their plans against these criteria and show these measures for the most common plan formulas in the U.S. Source: Vanguard.com Insights Into Retirement Spending Behaviors: Three New Spending Surprises Preparing for a financially successful retirement requires careful planning. Knowing what to expect at different life stages can help. Most Americans are encouraged to save as much as they can during their working lives, but what happens when they enter a new stage by retiring, and their focus shifts from saving to spending? To answer that question, this report takes a closer look at the spending patterns of American households by leveraging de-identified data from more than 280,000 households. Source: Jpmorgan.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers The Fiduciary Rules and the Impact on Advisors and Insurance Agents Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit podcast, Fred and Brad look at the new fiduciary rules and their impact on advisors and insurance agents. Source: Spotlightonbenefits.com The New Fiduciary Rule: The "Hire Me" Exception Not every conversation with retirement investors is a recommendation under the DOL's new fiduciary rule. There are three notable exceptions, two of which are discussed in the preamble to the regulation: education and "hire me." This article discusses the "hire me" exception. Source: Fredreish.com Court and Legal South Carolina 401k Plan Smacked With Excessive Fee Suit Another multi-billion-dollar 401k plan has been sued for what are allegedly excessive fees by a firm not previously noted in this genre. The suit alleges that, rather than acting for the exclusive benefit of the Sonoco Plan and its participants and beneficiaries, the defendants "allowed the Sonoco Plan's recordkeeper to receive excessive compensation for the services it provided." Source: Napa-net.org Nine Insurance Trade Groups File Suit Against DOL's New Fiduciary Proposal The DOL went into the Memorial Day weekend with a fresh lawsuit seeking to undo its Retirement Security Rule filed by nine insurance trade associations. The associations filed the suit in the U.S. District Court for the Northern District of Texas, which is within the jurisdiction of the Fifth Circuit Court of Appeals. The associations cited the Fifth Circuit in the complaint because several years ago the court overturned a prior rule DOL intended to change the definition of what it means to give fiduciary advice for retirement investments. Source: Planadviser.com Bugielski v. AT&T Services, Inc.: Another Key Case Toward Defining the Future of 401k Litigation SCOTUS may soon have yet another ERISA-related case to review. AT&T Services, Inc. recently petitioned SCOTUS for a writ of certiorari to review the Ninth Circuit's decision in Bugielski v. AT&T Services, Inc. AT&T presented the question for the Court as follows: Whether a fiduciary to an employee benefit plan causes the plan to engage in a prohibited transaction under Section 406(a)(1)(C) of ERISA by entering into a routine, arm's-length agreement for plan services. Source: Fiduciaryinvestsense.com Bechtel Faces 401k Suit Over Default Managed Accounts Engineering and construction firm Bechtel, its board, and its trust and thrift plan committee have been sued for allegedly defaulting plan participants into managed accounts that were not justified for the fees. The plaintiffs are seeking payment including "all profits which participants would have made if the defendants had fulfilled their fiduciary obligations." Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Senators Introduce Bill to Boost Small Biz Retirement Plan Start-up Credit Legislation that would make it easier for small businesses to fully cover the administrative costs of starting a retirement plan for their employees was introduced in the US Senate this week by a bipartisan pair of senators. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory IRS Releases Guidance on Disaster Relief Distributions and Loans Under 401k Plans The IRS issued guidance in the form of "frequently asked questions" on disaster relief distributions and expanded loans under qualified retirement plans, including 401k plans, under the SECURE 2.0 Act. This article briefly reviews what's in the FAQ. Source: Compliancedashboard.net GAO Wants 401k Participants to Have More Info When Changing Jobs Information regarding retirement plan distribution and rollover options after leaving a job is too scarce and too slow. According to a new Government Accountability Office report, only a third of plan participants receive important notice that could help them decide on their retirement savings. The GAO cited federal data noting that more than 92 million Americans participate in and have saved more than $7 trillion in 401k plans. Source: Asppa.org »» Click here for more Compliance and Regulatory Material Marketplace News Investment Company Institute Unveils New Logo Betterment Sweetens XYPN Deal Big-Time to Reflect Conviction It Can Own Micro-RIA Custody
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