Plaintiff Lawyers Can Now Use AI to Identify Potential Plan Issues
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In This Issue
Court and Legal
Plaintiff Lawyers Can Now Use AI to Identify Potential Plan Issues Tech and legal firm Darrow uses AI as a tool for ERISA lawsuit allegations such as underperforming plans and excessive fees. Attorney Levine, who often represents fiduciary defendants, says that the use of AI in this field of law is relatively new, but its use is "very much a data processing tool," and little else. Fiduciaries should generally follow the same principles as before, he says, but since AI models tend to focus on data procured from Form 5500s, sponsors should consider evaluating their Form 5500 reporting to be sure everything is accurate. Source: Planadviser.com
Can a TPA's Exploitation of a Plan Sponsor's Breach of ERISA Duty Make the TPA a Fiduciary? The new theory of liability is that TIAA knew of the plan sponsors' failure to exercise oversight of TIAA's sales tactics, a clear breach of fiduciary duty by the plan sponsors. TIAA allegedly knowingly exploited this failure for its benefit. Therefore, even though the company was a service provider and arguably not a fiduciary under ERISA, this knowing collaboration in the sponsor's breach brought it within the ambit of the law. It is a creative argument, it is convoluted, and it is one to watch for the future. Source: Lawyersandsettlements.com
Novel 401k Plan Lawsuits Over the Use of Forfeitures This article summarizes the factual similarities in the two lawsuits over the use of plan forfeitures to offset employer contributions, highlights and contrasts key aspects of each court's claims analysis, and offers some commentary. It also provides steps for plan sponsors to consider taking in light of what may be a growing trend in ERISA litigation. Source: Verrill-law.com
Salesforce Settles ERISA Class Action With 50k Workers Just a week before a bench trial was scheduled to begin, Salesforce reached a settlement with as many as 50,000 of its employees in a class action lawsuit over its 401k plan. The San Francisco-based software company faced claims of breach of its fiduciary duties under ERISA for failing to replace costly and underperforming investment options in the 401k plan. The workers had sought over $5 million in damages, plus prejudgment interest, to be divided among the plan participants in proportion to their account losses. Source: Hallbenefitslaw.com »» Click here for more Court and Other Legal Issues Fiduciary and Plan Governance
What Plan Sponsors Should Know About DOL's Final Fiduciary Rule While the direct effect of the DOL's final fiduciary rule on plan sponsors appears modest, plan vendors may decide to modify their service models -- including associated fees -- and sales practices. This is a comprehensive review of the rule including implications for plan sponsors. Source: Mercer.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers
Here is a report on the current state of defined contribution plans in America. How does your plan stack up? The comprehensive plan data in "How America Saves 2024" puts the trends of the retirement industry right at your fingertips so you can stay current, create stronger plans, and provide better participant outcomes. Source: Vanguard.com
Significant levels of change in federal law regarding employer-provided retirement plans, including a variety of new optional and mandatory provisions enacted since 2019, have put tremendous pressure on plan recordkeepers after years of fee compression. The 2024 PLANSPONSOR survey found that recordkeepers are juggling competing priorities of new mandatory and optional plan features alongside demands for their platforms to support retirement income, personalization, financial wellness programs, and more. Source: Plansponsor.com
Improving Retirement Outcomes: Demographic Considerations This 34-page policy paper discusses retirement inequities and how current retirement plan design elements and policies may inadvertently disadvantage certain cohorts of individuals. It offers potential changes and actions for consideration by policymakers, think tanks, actuaries, and employers/plan sponsors to improve retirement outcomes for groups facing inadequate retirement security under common designs. The paper concludes with considerations for further effort, research, and studies. Source: Actuary.org
SECURE 2.0 Optional Provisions Survey Insights From Plan Sponsors Fidelity recently invited over 2,000 clients to participate in an optional provision survey to obtain insight into client intentions. Top-ranked optional provisions reported by respondents include features such as the increased catch-up contribution limit for participants ages 60 to 63, as well as the new in-service distribution options made available under SECURE 2.0. Read this 5-page report to learn more about the emerging trends and considerations for plan sponsors as you evaluate SECURE 2.0 optional provisions. Source: Fidelityworkplace.com
Retirement Income Solutions: Recordkeeper Study In Q1 2024, the DCIIA RRC fielded two surveys to better understand retirement income and distribution capabilities offered by major recordkeepers. These surveys examined multiple elements, including priorities in retirement income strategy, influences in solution development, technological challenges, annuity offerings, frequencies of distribution types, and fee tiers. By analyzing the strategies and frameworks employed by major recordkeepers, the report aims to provide an aggregated, clearer perspective on capabilities to support retirement income solutions. Source: Dciia.org HOOPP and Abacus Data Release the 2024 Canadian Retirement Survey When people talk about their retirement, it often focuses on freedom from work, spending time with friends and family, and perhaps traveling the world on luxury cruises. But the retirement dream may never be realized for millions of Canadians who are woefully unprepared for their post-work years, according to new research from the Healthcare of Ontario Pension Plan and Abacus Data which suggests a bleaker future could be ahead, especially for women. Source: Pensionpulse.blogspot.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers
CFP Board Backs DOL Fiduciary Rule in Federal Court Writing in an amicus, the CFP Board cautions that "If the Court accepts Plaintiffs' arguments, then this will leave open significant regulatory gaps that allow advisors to recommend financial products, including insurance products, that are not in the best interests of retirement investors, in contravention of [ERISA's] mandate to provide a high level of protection for retirement assets." Source: Napa-net.org
Capital Group Names the Top Focus Areas for DC Investment Consultants Defined contribution investment plan consultants are focused on three areas (evaluating plan needs and offerings for retirement income, TDFs, and participant outcomes) that touch on the need to solve for the decumulation of assets by workplace retirement plan participants, according to recent research from Capital Group. Source: Planadviser.com Compliance and Regulatory
Form 5500 Participant Count: Cash or Accrual Basis? To Audit or Not to Audit? The number of participants as of the beginning of the year determines whether the plan's financial statements must be audited. Starting in 2023, eligible participants who do not have an account balance on the first day of the plan year are no longer included in the participant count used to determine whether the plan must be audited. The literal application of this rule seems quite simple. No money, no account, right? Maybe not! Source: Belfint.com
Financial Incentives for Employee Participation in 401k Employers who sponsor 401k and 403b plans without auto enrollment provisions have traditionally been challenged with increasing participation rates. Most employers were interested in different options to encourage more employees to affirmatively make elective deferral contributions into their retirement plans. Thanks to SECURE 2.0, for plan years beginning after December 29, 2022, employers that sponsor 401k or 403b plans may offer employees a "de minimis" financial incentive. Source: Consultrms.com
The SECURE 2.0 Act of 2022 added new exceptions to the 10% additional tax for emergency personal expense distributions and domestic abuse victim distributions. These new distributions became effective January 1, 2024. On June 20, 2024, the IRS issued Notice 2024-55 which provides new guidance regarding these distributions and is reviewed here. Source: Ktslaw.com »» Click here for more Compliance and Regulatory Material Marketplace News Fisher Investments to Spin Off Independent 401k Practice American Retirement Association Announces Major Digital Upgrade Initiative SageView Collaborates With Transamerica to Launch Integrity Pooled Solutions
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