Suit Foreshadows Future 401k Rule Litigation
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Court and Legal Suit Foreshadows Future 401k Rule Litigation A New York federal district court ruling tying TIAA to the alleged misconduct of its clients offers a rare glimpse at the upturned legal landscape awaiting pension servicers when a new 401k advice rule takes effect. Source: Wagnerlawgroup.com Use of 401k Plan Forfeitures Continues to be Scrutinized in Litigation Forfeitures typically occur when an employee leaves a company before fully vesting in the 401k plan, thus leaving the employer with excess contributions. In a handful of recent lawsuits, plan sponsors have been questioned about their use of forfeitures assets to reduce employer contributions in 401k plans. Source: Plansponsor.com Lawsuit Against TIAA Over Managed Account Service Moves Forward TIAA's request to dismiss an amended lawsuit filed against it regarding a managed account service for participants was denied by a federal district judge in New York, with an order for the firm to provide an answer by June 21. The plaintiffs alleged that TIAA breached its fiduciary duties to participants under ERISA for allegedly cross-selling the firm's adviser-managed account service known as Portfolio Advisor, which comes at a higher cost than remaining in the plan. Source: Planadviser.com District Court Denies Motion to Dismiss Forfeiture Complaint The United States District Court for the Southern District of California found that the Plaintiff had made a plausible complaint for a violation of ERISA Section 404(a)(1). In particular, the Court described the exact nature of the harm alleged by Plaintiff as well as its basis for concluding that Plaintiff's claim of disloyalty was plausible. Source: Wagnerlawgroup.com »» Click here for more Court and Other Legal Issues Insight: Studies, Research, Analysis, and Papers The Rothification of Retirement This PLANADVISER special coverage series considers the push toward increased Roth use in defined contribution plans and the implications for plan advisers, sponsors, and participants. Source: Planadviser.com How Does Inflation Impact Near Retirees and Retirees? Because inflation has been so low for so long, the risks of inflation have been generally overlooked and recent history does not offer much practical insight on its impact. This article, which is the first of two based on a new study, illustrates the financial consequences of high inflation by using economic theory and hypothetical households to trace possible paths of consumption and wealth under different macroeconomic scenarios. Source: Bc.edu What Can Canadian DC Plans Learn From U.S. Pension Legislation? Features such as automatic enrolment in 401k savings plans are helping U.S. employees become retirement-ready, said Mark Iwry, a non-resident senior fellow at the Brookings Institution. As a result of auto-enrolment legislation, millions of workers who wouldn't be saving for retirement are now participating in a workplace retirement plan, he said. Adding the expansion of auto features in the Canadian retirement landscape would likely have a similar impact. Source: Benefitscanada.com What Keeps Employees From Contributing to Their Workplace Retirement Plan? Nearly six-in-10 employees (59%) who are not contributing to their 401k or other workplace retirement plan think they are, according to the latest Principal Retirement Security Survey. Three out of every four of those employees (77%) believed they started saving upon becoming eligible to contribute. This misperception, compounded by persistent inflation and elevated interest rates, makes it harder for Americans to reach their retirement goals, according to Principal. Source: Principal.com New Report Analyzing 20 Years of 401k Managed Account Data, Innovation, and Trends Edelman Financial Engines released a report that features data and insights gained from 20 years of helping employees save for retirement through its managed account program. It finds that managed accounts are helping employees of all ages with optimal benefits and uptake closer to retirement age. Source: Edelmanfinancialengines.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers The New Fiduciary Rule: The Education Exception Not every communication with retirement investors is a recommendation. There are three notable exceptions in the new fiduciary rule, two of which are discussed in the preamble to the regulation: education and "hire me." This article by Fred Reish discusses the DOL's position on investment and retirement education. Source: Fredreish.com The DOL Fiduciary Rule Is Here: Are You an Investment Advice Fiduciary? Where for decades there was a five-part test that made a distinction between sales activity and ongoing, individualized investment advice that was relied upon by an investor as a primary basis for investment, the new definition now tries to cover all persons who interact with an investor and make a recommendation for an investment in a way that a reasonable investor might think they are acting as a fiduciary. The regulation now encompasses both individual retirement accounts and single rollover transactions. Source: Carltonfields.com The New Fiduciary Rule and Amended PTE 2020-02: Effective Date Considerations With the DOL's new fiduciary advice rule, many advisors will need the protection provided by Prohibited Transaction Exemption 2020-02 to receive the conflicted compensation resulting from the fiduciary advice. The DOL amended PTE 2020-02 at the same time as the new fiduciary rule; however, the effective date for some of the PTE's conditions is delayed. This article describes the effective dates that apply to PTE 2020-02. Source: Brokerdealerlawblog.com Employee Education and Communications Three Considerations for Navigating Participants Through Uncertainty Volatility is a fact of investing life, but market turmoil on a large scale can raise concerns among even the most battle-hardened investors about long-term market trends and impacts. Here is what plan sponsors can do to help participants combat fear and stay invested during market volatility. Source: Blackrock.com »» Click here for more Education and Communications Material Compliance and Regulatory Best Practices for a Self-Audit of Your Retirement Plan For small plans that have no audit oversight, it behooves plan sponsors to trust, but verify that their plan officials are operating the plan by its terms. In addition to maintaining sound internal control policies and procedures, plan sponsors can add a layer of verification through a self-audit or an agreed-upon-procedures engagement performed by an independent accountant or specialized professional. Here is a menu of contribution-related procedures that plan sponsors could consider when designing a self-audit program. Source: Belfint.com Expanded Abandoned Plan Program Gives Certain Bankruptcy Trustees QTA Eligibility A new DOL interim final rule expands eligibility to serve as a "qualified termination administrator" to include Chapter 7 bankruptcy trustees and certain parties appointed by such trustees. Beyond expanding QTA eligibility, the interim final rule also makes several technical changes that may impact the administration of abandoned plans. Here is the background and a review of the interim final rule. Source: Groom.com SECURE 2.0: IRS Issues Fact Sheet on Disaster Relief Distributions and Plan Loans The IRS recently issued Fact Sheet 2024-19, which addresses the special rules for distributions and plan loans for certain individuals impacted by major federally declared disasters under the SECURE 2.0 Act. Though not breaking much new ground, the fact sheet provides clear and helpful guidance to plan sponsors choosing to extend all or some of the distribution and/or loan relief to their employees in the wake of disasters. Source: Morganlewis.com »» Click here for more Compliance and Regulatory Material Marketplace News Blue Ridge Associates Acquires TSC 401k 2024 PLANSPONSOR of the Year Award Winners Named Ascensus Restructures Sales Team Vestwell Bolsters 401k Leadership With JPMorgan Deal TRPG Heads to Hawaii in Latest Acquisition
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