2024 PLANADVISER Adviser Value Survey
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In This Issue
Items of Special Interest to Advisers and Other Service Providers 2024 PLANADVISER Adviser Value Survey By comparing metrics from plans that work with an adviser to those that do not, the 2024 PLANADVISER Adviser Value Survey finds plans with advisers are more likely to use automatic escalation, have higher default deferral rates, and have stronger chances of a company match. But where adviser presence makes a difference is in plan governance and fiduciary training, to ensure clients are meeting regulatory needs, and staying protected from audit and litigation risks. So how can an advisory ensure it is keeping up with the market on governance and fiduciary needs? Source: Planadviser.com Senior DOL Official Defends Fiduciary Rule; Says Appeals Could Take Years Ali Khawar, the Principal Deputy Assistant Secretary of Labor for EBSA, at the CFP Board's 2024 Connections Conference defended the Retirement Security Rule and noted that the Department of Labor will appeal the court decisions that have paused its implementation. Khawar explained that the Retirement Security Rule is an important priority for the DOL. Source: Asppa-net.org Fiduciary and Plan Governance Understanding Fiduciary Duty Under ERISA and Avoiding Potential Breaches Leading to Lawsuits Recent lawsuits have emphasized that employers who sponsor employee benefit plans under ERISA are fiduciaries. This fiduciary duty means that employers owe an increased duty of care to the plans and their beneficiaries. As a result, employers should take certain precautions to avoid lawsuits based on a breach of their fiduciary duty. Employers need to demonstrate a rational process behind their actions. Employers can demonstrate a rational process by adopting policies and procedures to interpret and administer their plans. Source: Hallbenefitslaw.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers Four Compelling Reasons for Plan Sponsors to Adopt Auto Portability In July, an article noted that the adoption of auto portability was picking up steam with thousands of plan sponsors already signing up for the service, delivered by the Portability Service Network. As PSN operations have commenced, and as the automated plan-to-plan consolidation of small balances begins, a familiar industry adoption pattern is emerging where innovators within the plan sponsor community lead the charge and are quickly followed by others. Source: 401kspecialistmag.com 401k Student Loan Match Perk Hindered by Employer Hesitation While offerings from administrators like Betterment, Fidelity, and SoFi have already been marketed as services to facilitate matching for student loan payments, plan sponsor uptake appears to be lagging. Companies have been slow to offer an enticing new perk because of compliance and logistical concerns even as the IRS cleared the way for employers to provide the benefit. Source: Wagnerlawgroup.com »» Click here for More Studies, Research, and White Papers 403b Plans IRS Addresses Long-Term, Part-Time Employees in 403b Plans in New In guidance issued on October 3, the IRS addresses long-term, part-time employees in 403b plans under SECURE 2.0 for plans beginning in 2025. The guidance comes in Notice 2024-73. The guidance includes a question-and-answer section about applying the nondiscrimination rules for 403b plans regarding LTPTEs, including rules to exclude part-time employee and student employee participation. Source: Asppa-net.org »» Click here for More 403b Material Court and Legal Why Does the DOL Allow ERISA Regulation Through Litigation By Plaintiff Lawyers Why would America's plan sponsors continue to offer retirement plans with generous company matches if the trial bar is going to turn these voluntary benefits into liability traps? Just wait for a recession, and smart employers that want to reduce liability risk will eventually eliminate employee benefit plans that are targeted by the plaintiff trial bar. If you think this is an exaggeration, then you have not been watching the latest five trends of the plaintiff ERISA trial bar as they work to create novel fiduciary liability as America's de facto fiduciary liability regulators. Source: Encorefiduciary.com Circuit Split Deepens With Home Depot's 11th Circuit ERISA Win A three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit has upheld the dismissal of a 401k-plan mismanagement suit brought by plan participants in favor of Home Depot. The ruling affirmed a Georgia federal court's grant of summary judgment in the suit, in which plan participants claimed that the home improvement retailer violated ERISA in charging excessive fees and maintaining subpar investments. Source: Hallbenefitslaw.com Recent Developments in Forfeiture Cases: Update This article is the Wagner Law Group's sixth update reporting on and analyzing the nature of the "forfeiture" litigation claims raised by plaintiffs, the defenses asserted against them and the court opinions deciding the issues raised in these matters. In addition to providing an overview of the recent Thermo Fisher decision, this article also discusses the complaint filed against Knight Smith as well as a similar forfeiture complaint filed by the DOL in 2017. Source: Wagnerlawgroup.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Plan Security Relies on Vetting 3rd-Party Providers Retirement plan recordkeepers' increasing reliance on third-party vendors for various administrative services and tools poses a challenge for plan sponsors who need to vet these vendors, especially as many have been exposed to cybersecurity breaches in the past year. To protect participant data and personal information, plan sponsors should be aware of the subcontractors with which their recordkeepers work, of which have access to participant data, and of how to respond to a breach when one occurs. Source: Plansponsor.com A Guide to Buying and Maintaining Cyberinsurance Plan sponsors should understand that their fiduciary liability policy is not a substitute for cyber insurance. The cyber insurance market is intricate. Some product sellers are more knowledgeable than others, and some have access to more potential markets. Cyber insurance is not standardized, so sponsors need basic knowledge to evaluate insurance options and policy details properly. Source: Plansponsor.com Insider Threats: Are Disgruntled Employees a Cybersecurity Risk? Most plan sponsors' cybersecurity concerns are that outside hackers will attempt to get access to their systems, but disgruntled employees can also pose a threat. Internal threats account for about 20% of security threats, according to the Verizon 2022 Data Breach Investigations Report, making them rarer than outsider cybersecurity hacks. Still, certain employees, such as those in human resources, information technology, or treasury, may have access to plan information or other personally identifiable information. There are, however, ways to prevent or limit potential damage caused by disgruntled employees. Source: Plansponsor.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Some "Good Deeds" Do Go Unpunished: Ineligible Hardship Distributions in 401k Plans An employer who wants to help employees in a financial bind at all costs can lead him to authorize hardship distributions that are not permitted by the plan document's provisions. As the saying goes, Mr. Bleeding Heart had good intentions, but now he is in a bind of his own, an operational error that he needs to correct. He feels like "No Good Deed Goes Unpunished," but there is hope. Source: Belfint.com Disaster Relief: Keeping Plans and Participants Afloat Hurricane season proper starts June 1 and ends Nov. 1. But disasters do not respect the calendar. So a plan administrator, sponsor, or service provider may find it prudent to take steps and have information at their fingertips to ensure that the plan functions smoothly and continues to serve participants as intended even if the unexpected happens. Source: Asppa-net.org IRS Ruling on 401k Discretionary Contributions On August 23, 2024, the IRS gave its approval to a novel arrangement in which employees participating in their employer's 401k plan would be permitted to elect to allocate certain employer discretionary contributions made under such plan among various other types of employee benefits offered by the employer. The IRS determined that, as long as specified conditions are met, the proposed arrangement would not cause the various plans to run afoul of the Internal Revenue Code rules applicable to the plans. Source: Compliancedashboard.net The Final RMD Regulations: The High Points The good news is that the final RMD rules did not make major changes to the 2022 proposed regulations. But there are important refinements and clarifications, and, of course, discussion of many of the SECURE 2.0 RMD changes that Congress passed after the Treasury released the proposed regulations. This article highlights some of the most important changes. Source: Ferenczylaw.com »» Click here for more Compliance and Regulatory Material Marketplace News Apollo, Athene Working On Alts, Annuities in DC Investing Walgreens Will Offer Student Loan 401k Match Program Vestmark, BlackRock Partner to Strengthen Custom Model Portfolios Managed Accounts Get More Personal in PGIM RetireWell/iJoin Deal
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