DOL Must Issue ERISA Guidance on "Foreign Adversary" Investments
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Insight: Studies, Research, Analysis, or Papers
Items of Special Interest to Advisers or Other Service Providers Court and Legal
Legislative or Washington DC Cyber and Plan Security Compliance and Regulatory
Marketplace News Article Summaries Fiduciary and Plan Governance DOL Must Issue ERISA Guidance on "Foreign Adversary" Investments On February 21, a presidential memorandum instructed the DOL to update ERISA fiduciary standards regarding investments in public market securities from "foreign adversary companies." This directive is part of the Trump administration's America First Investment Policy, which seeks to promote foreign investment while safeguarding national security. The article discusses potential questions that sponsors and fiduciaries of defined benefit and defined contribution plans, as well as welfare plans like VEBAs, may have regarding the upcoming guidance, though it notes that no immediate action is required from them at this time. Source: Mercer.com Facing a Chaotic Market: Reminders and Recommendations for Retirement Plan Fiduciaries In today's volatile markets, it's crucial to review your 401k fiduciary process to ensure that both you and your employees are making sound decisions in compliance with ERISA regulations. When the markets are performing well, participants often neglect underlying structural issues within the plan, focusing instead on growing their account balances. Conversely, during downturns, participants -- particularly those approaching retirement -- may seek to address potential shortcomings in the retirement plan to recover from market losses. Keeping this in mind, here are five strategies to safeguard yourself and your retirement plan. Source: Barran.com 401k Plan Sponsor Questions Most Forget to Ask Many questions about 401k plans often go unasked, even though the sponsors of these plans have important responsibilities to manage them properly. By asking these important questions ahead of time, sponsors can help improve the financial security of the people who participate in the plan and also protect themselves from any risks that come from not fulfilling their duties. Source: Fiduciarynews.com Be Choosy When Picking Your 401k Plan's TPA The author, an ERISA attorney since 1998, gained valuable insights by working as a staff attorney for a third-party administrator, which provided a unique perspective on the retirement industry. Over nine years, he observed various aspects of the business, enabling them to offer informed advice to plan sponsors and retirement plan providers. In the article, he shares experiences and cautionary tales, offering guidance on what plan sponsors should avoid when selecting a TPA. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Report Raises Eyebrows About Claims of Rampant "Red Flags" in Retirement Plans An expert criticized a recent analysis highlighting extensive ERISA noncompliance as "scaremongering." In January, the New York-based consulting firm Abernathy Daley released a report claiming that approximately 84% of U.S. retirement plans exhibited at least one "red flag" indicative of a potential violation of ERISA. However, some industry professionals have disputed the firm's assertions regarding the prevalence of compliance risks. Source: Hrdive.com 401k Loan Size Ticks Up for 2024 According to a benchmarking report by T. Rowe Price, the average size of 401k loans increased to $10,250 in 2024, reflecting a 4% rise that slightly outpaced inflation. The report indicates that participants across all age groups, especially those nearing retirement, have increased their loan amounts. Specifically, 11% of respondents over 70 and 10% of those aged 65-69 reported larger loans, compared to 9% for those aged 20-29 and 4% for ages 30-39. Overall, retirement plan loan usage has risen by two percentage points since 2023 but remains lower than the peaks seen from 2015 to 2019. Source: 401kspecialistmag.com Former Employees Can Lose Thousands to Hidden 401k Fees A new analysis by PensionBee reveals that individuals who leave their jobs without managing their 401k accounts may incur significant hidden fees, potentially totaling up to $18,000 in account maintenance costs. When employees exit a company, their former employers may start charging fees previously covered by the organization. This situation is compared to COBRA insurance, which allows former employees to maintain their health insurance at a cost, but unlike COBRA, individuals are not informed about these fee changes upon leaving their jobs. Source: 401kspecialistmag.com Report Finds TDFs are Popular, but Misunderstood A report from the Public Research Retirement Lab found that target-date funds are more favored among younger retirement investors compared to other investment types. However, it also noted that TDFs may not be well understood by the general public. The PRRL, a collaboration between the Employee Benefits Research Institute and the National Association of Government Defined Contribution Administrators, analyzed a sample of 2.3 million participants with total assets of $148 billion, categorizing investments into 14 groups. Source: Psca.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers DOL Gets 60 More Days to Decide Next Steps in Fiduciary Rule Lawsuit U.S. Circuit Judge Catharina Haynes of the 5th Circuit Court of Appeals has granted the Department of Labor an additional 60 days to consider its options regarding two court cases challenging the 2024 Retirement Security Rule. This extension, which moves the deadline to June 16, 2025, was approved as the DOL requested more time to adapt to changes in presidential administration and to allow new DOL leadership to understand the litigation issues. The motion for the extension was unopposed. Source: Planadviser.com Court and Legal U.S. Chamber Pushes Back on 401k Excessive Fee Suit Appeal The U.S. Chamber of Commerce and several retirement trade associations defended fiduciary defendants in a recent excessive fee lawsuit, claiming it is part of a larger trend of ERISA class-action complaints seeking costly settlements. Judge Rebecca Ebinger dismissed the lawsuit last November, stating the plaintiffs failed to provide proper benchmarks for comparing expenses, which hindered their claims of breached fiduciary duties. The plaintiffs have since appealed the dismissal. Source: Napa-net.org In a unanimous decision reversing the dismissal of claims related to fees paid to defined contribution plan recordkeepers, the Supreme Court ruled that ERISA's prohibited transaction exemptions are affirmative defenses. Therefore, plaintiffs are not required to include these exemptions in their initial pleadings to state a valid claim. Although the Court recognized that this ruling might enable some plaintiffs to overcome dismissal with minimal allegations, it determined that concerns about a potential rise in meritless lawsuits do not outweigh the clear language and framework of the statute. Source: Seyfarth.com Supremes Back Plaintiffs in Cornell ERISA Burden of Proof Standard The U.S. Supreme Court ruled unanimously in favor of retirement plan participants who sued Cornell University over excessive fees in its 403b plan. The decision clarified that under ERISA, plan fiduciaries must both plead and prove exemptions to prohibited transactions. Additionally, plaintiffs challenging such transactions do not need to specify whether statutory exemptions apply in their complaints, marking a significant win for employees. Source: Napa-net.org »» Click here for more Court and Other Legal Issues Legislative or Washington DC American Worker Retirement Plan Act Reintroduced in House Representative Lloyd Smucker reintroduced the Retirement Savings for Americans Act on April 7. The proposed legislation aims to provide federally run retirement savings accounts for low- and middle-income workers who lack access to employer-sponsored plans. If enacted, the Department of the Treasury would manage the program, offering matching contributions of up to 5%, consisting of a 1% automatic contribution and a tax credit match of up to 4%, phased out at the national median income level. Eligible workers would be automatically enrolled at 3% of their income, with the option to opt out or increase contributions. The program is designed to function similarly to existing automatic individual retirement account programs in 20 states. Source: Planadviser.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Cybersecurity and 401k Plans: Top Priority for Plan Sponsors in 2025 Cybersecurity has become an essential fiduciary obligation for 401k plan sponsors, evolving beyond a mere IT issue. With the rise of sophisticated cyber threats targeting valuable retirement accounts, employers must proactively protect participant assets and sensitive information. Fiduciaries are now required to ensure the security of these assets with the same prudence, care, and diligence as other financial responsibilities. Source: Savantwealth.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory 2026 401k Contribution Limit on Track for $1,000 Increase: Milliman The maximum 401k contribution limit, currently $23,500 for 2025, is projected to increase by $1,000 to $24,500 in 2026, according to Milliman's latest IRS limits forecast. This forecast, based on Consumer Price Index data, predicts the annual adjustment that the IRS typically announces in late fall. Source: 401kspecialistmag.com Case of the Week: Embezzlement -- Are Plan Assets Safe? The ERISA consultants at the Retirement Learning Center responded to a financial advisor's inquiry regarding whether a business owner could use a terminated employee's 401k plan balance to compensate for losses caused by that employee's embezzlement. This scenario reflects a broader concern about 401k plan embezzlement and the legality of accessing a former employee's retirement funds to alleviate business losses. The question highlights the complexities surrounding 401k plan balances and the implications of employee theft on a business's finances. Source: Napa-net.org »» Click here for more Compliance and Regulatory Material Marketplace News Candidly, Fiducius Partner to Offer Student Debt Repayment Benefits Blue Ridge Associates Acquires Qualified Retirement Plans Services State Street Launches Target-Date Platform for DC Investors
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