Embracing AI to More Efficiently Process Retirement Plan Documents
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In This Issue - Headlines Fiduciary and Plan Governance
Insight: Studies, Research, Analysis, or Papers
Items of Special Interest to Advisers or Other Service Providers
Employee Education and Communications Court and Legal
Legislative or Washington DC Compliance and Regulatory
Marketplace News Article Summaries Fiduciary and Plan Governance Embracing AI to More Efficiently Process Retirement Plan Documents Artificial intelligence is becoming increasingly prevalent across various sectors, showcasing a wide range of applications. Yet, many professionals within the retirement plan industry are still exploring how to effectively incorporate AI into their processes. In a discussion with PLANADVISER, ERISA attorney David Levine shared insights on how he has leveraged artificial intelligence to create a tool for retirement plan administration and offered his predictions on its future implications for the industry. Source: Planadviser.com AI in 401k Plans: Cool, But Who's Getting Sued When It Goes Wrong? The concept of Artificial Intelligence can seem intimidating, often resembling themes from sci-fi movies like Terminator. However, AI is making inroads in the 401k industry, particularly in areas such as participant engagement, plan analytics, and investment management. Despite its capabilities, many 401k plan sponsors lack a deep understanding of both their plan documents and AI's underlying technology. While AI offers useful solutions, it also introduces significant legal and compliance challenges that can put a strain on plan sponsors, raising concerns about fiduciary responsibilities. Source: Jdsupra.com Documentation and Review: Reminders for the ERISA Plan Fiduciaries This article highlights specific actions that plan sponsors should take to enhance their compliance measures. These include: implementing a systematic approach for selecting and monitoring service providers, regularly reviewing and updating service provider contracts to ensure reasonable fees and transparency, ensuring that plan documents adhere to relevant state and federal regulations, gaining a clear understanding of the fees associated with administration, consulting, and plan networks, and updating contracts and procedures to address cybersecurity responsibilities. Source: Barran.com Common Mistakes and Practical Advice When Acquiring a Company With a 401k Plan Acquiring a company with a 401k plan involves significant risks, especially with recent legal changes and trends. Buyers must understand these developments to avoid harming employees or exposing their 401k plan to prior liabilities. Conducting thorough due diligence on the seller's 401k plan is crucial for making informed decisions and minimizing legal risks. Source: Foley.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Workers Overwhelmingly Call on Employers to Offer Lifetime Income in 401k Plans A recent survey by Nuveen and the TIAA Institute reveals a significant shift in attitudes toward retirement income among 401k participants. Nearly all respondents (93%) believe it is essential for their retirement plans to offer options for converting savings into guaranteed monthly income that lasts a lifetime. Additionally, 87% feel that employers should help ensure employees achieve retirement income security. This represents a dramatic rise in interest in guaranteed lifetime income, with only 59% of workers expressing the same view in a 2021 survey. Source: Prnewswire.com Retirement Savings to Retirement Income 401k Participant Perspectives: Study Traditional 401k plans have often lacked a mechanism for converting retirement savings into a consistent monthly income for retirees. However, this is starting to change, partly due to the SECURE Act. To better understand 401k participants' views on this issue, Nuveen and the TIAA Institute conducted a survey focused on the conversion of retirement savings into retirement income, particularly the role of in-plan annuities. The 18-page report outlines the key findings from this Participant Sentiment Survey on Lifetime Income. Source: Tiaa.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers Service: The Essence of the TPA In a recent Broadridge webinar, industry experts Russell Hooker from NOVA 401k Associates and Matt King from The Standard discussed the vital role of third-party administrators in the retirement plan marketplace. They emphasized that TPAs serve an essential function similar to that of a CPA for retirement plans, focusing on customizing plans to meet the specific needs of plan sponsors. Hooker highlighted the importance of engaging with sponsors to understand their goals and how to effectively design the plan to help them achieve those objectives. Source: Asppa-net.org Fidelity Went Live Last Year With 'Free-Money' 401k, Now Schwab Has Launch Its Own Program Major 401k recordkeepers are competing to provide plan participants access to billions in cash that employers want to allocate under new regulations from the SECURE Act 2.0. Fidelity Investments has initiated a 401k program designed to offer "free money" to individuals with negative net worth, allowing employers to match contributions that directly pay down student debt. Following suit, Charles Schwab Corp. announced it would implement a similar program in partnership with Candidly, a 2016 startup, aimed at supporting millions of young employees who previously lacked access to such options. Source: Riabiz.com Employee Education and Communications How AI Is Transforming 401k Education for the Next Generation Incorporating AI into 401k education marks a substantial advancement over current digital employee education platforms. The era of relying solely on quarterly enrollment meetings for employee education is over. Thanks to online delivery systems, employees can now access information on demand, eliminating the need to wait for scheduled meetings. Source: Fiduciarynews.com »» Click here for more Education and Communications Material Court and Legal Pizarro v. Home Depot and the Future of ERISA Litigation Following its landmark ruling in Cunningham v. Cornell University, the Supreme Court is now addressing another significant ERISA case, Pizarro v. Home Depot, Inc. The central question in Pizarro is which party carries the burden of proof regarding causation after the plaintiff has plausibly presented their case and demonstrated a loss. Unlike in Cunningham, the Pizarro case does not involve prohibited transactions or exemptions, suggesting that its ruling could have wider implications for future ERISA litigation. Source: Fiduciaryinvestsense.com Suit Says Cigna Committed Fiduciary Faults With Stable Value, Forfeitures A lawsuit has been filed by participants Amanda Reven and Antoinette Argentine, accusing The Cigna Group 401k Plan Retirement Plan Committee of fiduciary breaches related to a stable value option and misuse of plan forfeitures. The plaintiffs, represented by Capozzi Adler PC, claim that the committee failed to properly and adequately review the plan's investment portfolio, both initially and continuously, to ensure that each investment option was prudent in terms of performance. Source: Napa-net.org What is an Improper Use of Forfeiture Case Worth? Intuit Settlement Provides Perspective On Friday, May 16th, the plaintiff's counsel in the Rodriguez v. Intuit Inc. case submitted a motion to approve a settlement of $1,995,000. The motion suggests that this settlement represents a reasonable compromise between the parties involved; as the saying goes, a fair compromise often leaves no one entirely satisfied. The resolution raises questions about the implications for other ongoing cases and retirement plans that have historically used forfeitures to adjust employer contributions. Source: Mmmlaw.com Lawsuit Filed Against UnitedHealth Alleging Misuse of Forfeited 401k Plan Assets UnitedHealth Group Inc. is facing a federal class action lawsuit, Kotalik et al. v. UnitedHealth Group Inc. et al., filed on April 28 in the District of Minnesota. The lawsuit alleges that UnitedHealth and the administrative committee of its 401k Savings Plan misused forfeited employee retirement plan assets, violating fiduciary duties under ERISA. Four current and former employees represent over 250,000 plan participants, claiming that the company improperly utilized 401k forfeitures to offset its contributions instead of covering plan expenses, which the plaintiffs argue is a breach of ERISA regulations. Source: Planadviser.com Plaintiff Assessed Court Costs in ERISA Case A federal judge has approved a request from plan fiduciaries for costs in a dismissed excessive fee lawsuit originally filed in 2022 by participant-plaintiff Guillermina Lopex against Embry-Riddle Aeronautical University, Inc. The lawsuit claimed that the fiduciary defendants included more expensive funds in the $500 million retirement plan than necessary, given the availability of cheaper alternatives. Although it's a positive development for fiduciaries to seek cost recovery after litigation, the judge ultimately reduced their request by half, noting that the lawsuit appeared flawed from the beginning and failed to substantiate its claims after multiple attempts. Source: Psca.org Plan Fiduciaries Faulted for Proprietary Fund Picks A lawsuit has been filed by a former participant on behalf of the Teachers Insurance and Annuity Association of America 401k Plan and TIAA Retirement Plan, alleging multiple breaches of fiduciary duty under ERISA. The suit targets TIAA, its Board of Trustees, the Plan Investment Review Committee, and unknown defendants (John Does 1-30). The allegations state that TIAA has retained proprietary in-house managed funds with a higher-cost share class in the Plans, despite the availability of a lower-cost share class, leading to higher fees for the Plans. Source: Napa-net.org »» Click here for more Court and Other Legal Issues Legislative or Washington DC Multiple Retirement Bills -- Including CITs in 403bs -- Being Marked Up in House This Week The House Financial Services Committee is holding a two-day session to mark up four bipartisan bills aimed at modernizing retirement plans, improving retail investor access to private markets, lessening regulatory burdens, and protecting seniors from financial fraud. Key bills include the Retirement Fairness for Charities and Educational Institutions Act (HR 1013) and the Improving Disclosure for Investors Act (HR 2441), both prioritized by the Insured Retirement Institute and the Investment Company Institute. Additionally, IRI supports the Senior Security Act (HR 1469), and ICI advocates for the Increasing Investor Opportunities Act among the many bills being considered. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory What You Need to Know About QDROs: Dividing Retirement Benefits in Divorce Dividing retirement benefits during a divorce is complex, often requiring a Qualified Domestic Relations Order to ensure proper allocation of benefits between the plan participant and an alternate payee, typically a former spouse or dependent. Understanding QDROs can help prevent delays and protect interests. This guide offers essential information from the DOL, the IRS, and the GAO to assist clients, family law attorneys, and retirement plan administrators in navigating QDROs more effectively. Source: Sblgllp.com Understanding Student Loan Matching Programs Student loans can hold your employees back and their retirement savings too. A student loan matching program can change that. This 6-page paper talks about how a student loan matching program works and why these programs are a game-changer. Source: Pensionplanspecialists.com »» Click here for more Compliance and Regulatory Material Marketplace News NAPA Launches Its Latest Certificate Program: 401k Managed Accounts
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