How Fiduciary Duty and Cognitive Decline Intersect
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In This Issue - Headlines Fiduciary and Plan Governance
Insight: Studies, Research, Analysis, or Papers Court and Legal
Legislative or Washington DC
Compliance and Regulatory
Marketplace News Article Summaries Fiduciary and Plan Governance How Fiduciary Duty and Cognitive Decline Intersect Plan sponsors have a fiduciary duty to protect participants and their retirement assets, a responsibility that becomes particularly challenging as workers face cognitive decline in later years. The National Institutes of Health projects a significant increase in dementia cases, with 42% of Americans over 55 expected to develop dementia by 2060, and two-thirds experiencing cognitive impairment by age 70. Compounding this issue, the Federal Trade Commission reported that U.S. consumers lost over $12.5 billion to fraud in 2024, a 25% increase from the previous year. As more participants retain their assets in their plans after retirement or job termination, plan sponsors must navigate the complexities of safeguarding these assets, especially for individuals who may be vulnerable to cognitive impairments and financial fraud. Source: Plansponsor.com Investment Menus: What to Expect From Your Retirement Plan Investment Advisor As a plan sponsor, a key responsibility -- perhaps the most critical one -- is ensuring that your organization's retirement plan is subject to adequate investment oversight. However, how can you determine whether your investment advisor is meeting the expected standards of service? This article highlights the essential functions of investment advisors and identifies potential red flags to watch for. Source: Retirementplanology.com Kaleda Comments on Fiduciary Responsibility David Kaleda, principal at Groom, stresses the importance of fiduciaries staying vigilant and proactive in fulfilling their responsibilities during times of market volatility. He explains, "Market fluctuations often lead participants to have numerous questions and concerns, which can be alleviated through effective communication and a strong investment education strategy." Source: Groom.com 401k AI Fiduciary Traps Spark ERISA Questions Plan sponsors and service providers shouldn't expect AI tools to create 401k miracles without careful due diligence. Relying on AI for 401k administration can be risky. AI can improve efficiency and personalize services, but it also poses fiduciary traps, such as compliance risks from biased or inaccurate outputs. The key is balance: AI offers benefits but requires rigorous oversight to prevent costly fiduciary errors. Source: Fiduciarynews.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers How Does Your 401k Plan Stack up Against the Industry? The ninth annual 401k Plan Benchmark Report by Judy Diamond Associates highlights the performance of 401k plans in 2023, showcasing both high and low performers across various industries and company sizes. The top five industries with the best 401k plans include financial advice/investment activities, certified public accountants, legal services, financial and insurance services, and engineering. The report analyzed around 640,000 active 401k plans with minimum asset levels, representing about 74 million eligible workers and $8 trillion in assets across 27 industry categories. The data is derived from Form 5500 filings for the 2023 plan year, reflecting the latest available information. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Court and Legal Supreme Court's Cornell Decision Has Broad Implications for ERISA Litigation On April 17, the Supreme Court issued its decision in Cunningham v. Cornell University, which will affect many plan sponsors with similar service arrangements. The Court set a very low standard for surviving a motion to dismiss, potentially encouraging meritless lawsuits. To address this, the Court suggested that district judges could impose safeguards -- such as requesting reply briefs and sanctions -- but these could be applied inconsistently at judges' discretion. As a result, more meritless claims are likely to survive initial dismissal, leading to increased settlements by defendants. Source: Cohenbuckmann.com Supreme Court Lowers Hurdles for ERISA Plaintiffs but Highlights Tools to Stop Meritless Claims Last week, the U.S. Supreme Court issued its decision in Cunningham v. Cornell University, easing the standard for pleading prohibited transaction claims under ERISA. The ruling permits claims to move forward based simply on allegations that an ERISA plan engaged in a transaction with a third party, regardless of whether the transaction appears harmless or even advantageous. However, while the Court broadened the scope for such claims, it also urged district courts to adopt innovative methods to promptly dismiss meritless cases. Source: Sidley.com On April 17, 2025, the U.S. Supreme Court unanimously ruled in Cunningham v. Cornell University that plaintiffs alleging prohibited transactions under ERISA are not required to plead facts showing that exemptions to prohibited transactions do not apply. This decision resolved a conflict among appellate courts and overturned the Second Circuit's dismissal of a similar claim, making it easier for plaintiffs to bring prohibited transaction claims against benefit plan fiduciaries. Source: Littler.com Supreme Court Declines to Hear AT&T ERISA Case The U.S. Supreme Court declined to hear AT&T's appeal regarding a prohibited transaction in a defined contribution plan, allowing the case Bugielski et al. v. AT&T Services Inc. et al. to return to the district court for further proceedings. The case, which focuses on prohibited transactions under ERISA, has been in litigation since 2017. Several industry groups had submitted an amicus brief requesting the Supreme Court to take up the appeal, but the justices did not comment on their decision. Source: Planadviser.com UWM Faces Class-Action Lawsuit Over Alleged Misuse of 401k Plan Assets United Wholesale Mortgage is facing a class-action lawsuit in a Michigan district court, alleging misuse of assets in its 401k retirement plan. The suit claims UWM violated ERISA by using plan assets to offset future employer contributions instead of addressing plan expenses. Allegations include breaches of fiduciary duties and violations of ERISA's prohibited transaction rules. UWM has dismissed the claims as "baseless," stating that it is among many publicly traded companies challenged by similar lawsuits regarding 401k plan practices. Source: Housingwire.com »» Click here for more Court and Other Legal Issues Legislative or Washington DC Where Will the Trump Admin Take Retirement Policy? At the NAPA 401k Summit in Las Vegas, ARA CEO Brian Graff posed a question to former Assistant Secretary for Labor for the Employee Benefits Security Administration, Preston Rutledge, about the extent of White House involvement in ERISA matters. Rutledge confirmed, "When it comes to 401ks? Yes, he genuinely cares about them." He noted that the key players in the White House, particularly within the National Economic Council led by Kevin Hassett, are actively engaged in these issues. Graff further inquired whether the fiduciary rule would be a priority for the department. Rutledge affirmed, "It will indeed be a priority. The real question is how they choose to approach it." Source: Psca.org Retirement Savings for Americans Act Reintroduced, Again Senators John Hickenlooper and Thom Tillis and Representatives Lloyd Smucker and Terri Sewell have introduced the Retirement Savings for Americans Act of 2025. This is the third time the RSAA has been introduced, having previously been introduced in the last two sessions of Congress. Source: Ascensus.com GOP House Bills Target DOL Audit Process Two bills proposed by Republican representatives in the U.S. House aim to increase transparency regarding Department of Labor audits. Representative Lisa McClain introduced the Employee Benefit Security Administration Investigations Transparency Act, which mandates annual reports to Congress on the status of DOL audits and ongoing investigations over 36 months. Additionally, Representative Michael Rulli's bill requires the EBSA to report annually on "adverse interest agreements." Both measures seek to amend the Employee Retirement Income Security Act of 1974 to enhance oversight of investigations. Source: Planadviser.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Uncashed distribution checks pose a growing fiduciary risk and administrative burden for qualified plan sponsors, especially as small-balance and separated participant accounts increase. These uncashed checks remain plan assets until cashed or resolved, with balances returning to participant accounts after 180 days, potentially triggering additional plan audits. Plan administrators should proactively minimize uncashed checks and address unresolved cases to reduce costs and compliance risks. This article reviews the issue and offers suggestions to minimize it. Source: Consultrms.com The issue of timely deferral deposits remains a contentious topic in the industry, largely due to the vague language used in regulations that leaves room for interpretation. According to DOL Regulation, deferral deposits should be made at the "earliest" reasonable time but must be completed by the fifteenth business day following the month of withholding. This regulation also applies to loan repayments withheld from employee pay. After discussions with regulators, it appears that most pension professionals avoid delaying deposits until the mandated deadline. However, the debate continues regarding whether there can be some flexibility for late deposits. Source: Belfint.com DOL Updates Voluntary Fiduciary Correction Program to Add a New Self-Correction Option The DOL has updated its Voluntary Fiduciary Correction Program to introduce a new Self-Correction Component. This allows plan sponsors and fiduciaries to self-correct certain prohibited transactions, such as delinquent contributions and loan repayments, without submitting a full VFCP application, under specific circumstances. They can do this by providing a notice and required information to the DOL. Additionally, the DOL has amended the related Prohibited Transaction Exemption to broaden the excise tax relief available for transactions corrected under the SCC. Source: Robertsandholland.com »» Click here for more Compliance and Regulatory Material Marketplace News Schwab, Candidly Team Up to Provide Student Loan Retirement Matching Resources Payroll Integrations and UKG Partner to Automate Payroll and Benefits Administration OneDigital, Broadridge Partner on Enhanced Retirement Data Solutions
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