DOL Has Been Improperly Sharing Information With Plaintiffs' Bar, House Republicans Allege
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In This Issue
Legislative and Washington DC DOL Has Been Improperly Sharing Information With Plaintiffs' Bar, House Republicans Allege Rep. Virginia Foxx, who chairs the House Committee on Education and the Workforce, has accused the DOL of "abusing its authority." She is calling for an investigation by the DOL’s Office of the Inspector General into allegations that the DOL and the Employee Benefits Security Administration have been secretly sharing confidential information with a plaintiffs' attorney to target plan fiduciaries. Foxx claims the DOL is collaborating with these attorneys to bypass legal protections by conducting investigations that serve as a pretext for obtaining information used in private lawsuits. Source: Ntsa-net.org Trump, New Congress Will Likely Continue Bipartisan Work to Expand 401k Coverage: Mercer Policy experts at consultancy Mercer suggest that despite Republican control of the House and Senate under President-elect Donald Trump, bipartisan efforts to expand employer-sponsored retirement plan coverage may continue. Geoff Manville noted during a Washington policy briefing that policymakers are likely to collaborate on further initiatives, often referred to as "SECURE 3.0," while the SECURE 2.0 Act of 2022 is being implemented. He emphasized that retirement issues are expected to remain a largely bipartisan focus in Congress, particularly regarding the guidance from agencies related to SECURE 2.0. Source: Planadviser.com Insecurity for ERISA's Retirement Security Rule After Trump's Election? The election of Trump is expected to have significant consequences for federal agencies, particularly regarding the Retirement Security Rule under ERISA. There is speculation about whether financial institutions will begin to dismantle their compliance efforts related to rollover solicitations due to the fluctuating regulatory stance of the DOL on the definition of "investment advice" in ERISA's fiduciary rules. This ongoing uncertainty may finally be nearing resolution, suggesting that clarity on the future of ERISA's fiduciary rules could be forthcoming. Source: Wagnerlawgroup.com »» Click here for more on Legislative and Washington Actions Fiduciary and Plan Governance Developing an Investment Policy Statement for Retirement Plan Sponsors: Video An investment policy statement is a formal document that explains the guidelines and procedures for how to manage an organization's investment portfolio. For retirement plan sponsors, this important plan document is part of creating a sound investment policy. In this video, learn about IPS development and the role an IPS can play in your risk management process. Source: Captrust.com The author argues that while pension plan sponsors who engage alternative asset managers bear both the risks and costs associated with their investment decisions, 401k plans present a different situation. Several reasons contribute to this distinction, but the author only briefly notes them here, suggesting that further discussion or deep dives into these reasons will occur later by themselves or by others. Source: Bostonerisalaw.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers Spending Retirement Savings is Keeping Americans Up at Night According to the Alliance for Lifetime Income's 2024 Protected Retirement Income and Planning Study, nearly 46% of American retirees experience anxiety over spending their savings, and 32% are depleting their funds faster than expected. The study, which surveyed 2,516 individuals aged 45-75, identifies inflation (82%) and healthcare costs (70%) as primary concerns affecting retirees' spending and saving. Many retirees lack a clear strategy for withdrawing savings or generating income in retirement, with only 32% having a specific income plan. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers Advisor Insights: Navigating Retirement Income In recent discussions, industry stakeholders have reached a consensus on the critical need to empower retirees with the ability to spend confidently. The focus has now shifted from merely identifying the challenges to actively exploring and implementing effective solutions. To gain insights into this topic, the author engaged with experts Jennifer Doss (National Practice Leader at Captrust), Kathleen Kelly (Managing Partner at Compass Financial Partners, a Marsh & McLennan Agency LLC Company), and Michael Kozemchack (Managing Director, Institutional Investment Consulting). They shared their perspectives on retirement income and the ongoing conversations they are having with plan sponsors to enhance the financial security of retirees. Source: Blackrock.com Morningstar Takes Sword to Grade Inflation, Likely to Slash 40,000 Funds' "Medalist" Ratings Morningstar has initiated a significant overhaul of its "medalist rating" system, which is expected to downgrade approximately 20% of current bronze, silver, and gold-rated funds by the end of 2025. The rating system reviews around 200,000 investment products, including ETFs, open-end funds, SMAs, CITs, model portfolios, 529 plans, and insurance products. The first round of downgrades began on October 29, affecting about 41% of bronze-rated funds, 38% of silver-rated funds, and 33% of gold-rated funds globally. Source: Riabiz.com 403b Plans IRS Regulations Clarify 403b Plans' Obligations to Part-Time Employees On October 3, 2024, the IRS issued guidance regarding the obligations of 403b plan sponsors to part-time employees, in light of new legislation effective January 1, 2025. This legislation mandates that long-term, part-time employees -- defined as those who work 500 or more hours in two consecutive years -- must be allowed to participate in 403b plans, regardless of previous exclusions. The IRS guidance, titled Notice 2024-73, clarifies which employees are eligible for participation, the extent of their required participation, and addresses several key questions about the rights of LTPT employees under 403b plans. Source: Bsk.com »» Click here for More 403b Material Court and Legal DC Plan Sponsors and Forfeiture Lawsuits Webinar: What You Need to Know In a recent webinar hosted by NEPC's Dan Beaton and Groom Law Group's Jennifer Eller, the discussion focused on the surge of lawsuits involving defined contribution plan forfeiture accounts. They explored the allowed uses of forfeitures and offered strategies for plan sponsors to minimize the risk of litigation in this area. The replay of the webinar is available here. Source: Nepc.com Capital One Facing 401k Plan Forfeiture Suit In a recent case, Capital One is facing a lawsuit regarding alleged forfeitures within its 401k plan. The lawsuit, filed by former employees, claims that the company improperly enforced a policy that led to the forfeiture of retirement plan benefits due to insufficient vested service. The plaintiffs argue that they were not adequately informed about the implications of the plan's provisions, which they believe was misleading and harmed their retirement savings. The outcome of this case may have significant implications for how companies manage their 401(k) plans and communicate with employees about their retirement benefits. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory DOL Initiates Data Collection to Reunite Workers With Lost Retirement Savings The DOL has begun efforts to create the Retirement Savings Lost and Found database, an online tool to help workers locate lost retirement benefits. Starting Monday, plan administrators, recordkeepers, and service providers are invited to voluntarily submit data to help populate the database, which is expected to launch by December 29. The EBSA has issued a request outlining the necessary data elements and submission methods, highlighting the importance of collaboration between the government and the retirement plan community for the tool's success. Source: Planadviser.com The Challenges of Census Data in Non-Discrimination Testing: Why Uniformity Remains Elusive Each year, 401k Plan Sponsors must compile a detailed employee census for non-discrimination testing, a process that can be frustrating and prone to errors related to data consistency and accuracy. Auditors often find discrepancies between census data and payroll records, highlighting the need for careful data management. Despite the requirement for NDT across all plans, there is no standard format for census reports, primarily due to various challenges that prevent uniformity in payroll systems. Source: 5500audit.com Avoiding 401k Problems With Former Employees The author reflects on his experience as a former employee to explain why his employer avoided hiring staff for their law firm. Additionally, his employer identified a potential liability risk for 401k plan sponsors involving former employees who still have account balances in the plan. To minimize this risk, the author recommends encouraging these former participants to roll over their balances or cash them out if they qualify under the cash-out provision. For more details, the full publication is available here for review. Source: Jdsupra.com Form 1099-R Distribution Codes for Defined Contribution Plans Form 1099-R must be issued by January 31 of the year following the distribution. The accompanying image outlines the most commonly used boxes on the form and provides explanations specifically for distributions from defined contribution plans. Source: Dwc401k.com IRS Releases Guidance on Overpayments From 401k Plans On October 15, 2024, the IRS issued Notice 2024-77, which outlines new rules for correcting overpayments from retirement plans, including 401k plans, under the SECURE 2.0 Act. This guidance clarifies situations in which plan sponsors can correct inadvertent benefit overpayments made to participants without needing to recoup those amounts or make corrective payments, a shift from the previous requirement that sponsors attempt recoupment to avoid potential plan disqualification. Source: Compliancedashboard.net »» Click here for more Compliance and Regulatory Material Marketplace News Corebridge Updates Retirement-Centered Digital Portals GreenPath 401k Debuts Retirement Plan for Legal Cannabis Industry New AI Retirement Planning Tool Aims to Transform How Americans View Their Futures
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