DOL Rescinds Biden Administration Guidance on 401k Cryptocurrency Investment
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In This Issue - Headlines Legislative and Washington DC
Fiduciary and Plan Governance Insight: Studies, Research, Analysis, or Papers Items of Interest to Advisers or Other Service Providers Employee Education and Communications
Court and Legal
Cyber and Plan Security
Article Summaries Legislative and Washington DC DOL Rescinds Biden Administration Guidance on 401k Cryptocurrency Investment The DOL has issued Compliance Assistance Release No. 2025-01, which rescinds the previous 2022 Release that discouraged 401k plan sponsors from offering cryptocurrencies as an investment option. While the 2022 guidance lacked legal force, it notably deterred plan fiduciaries from considering cryptocurrencies for inclusion in investment options. With the new release, fiduciaries may now evaluate the potential addition of cryptocurrency investments, ensuring alignment with their fiduciary duties under the plan. Source: Wagnerlawgroup.com DOL Rescinds Guidance Warning Against Cryptocurrency in 401ks The DOL's Employee Benefits Security Administration has rescinded a 2022 compliance release that discouraged fiduciaries from offering cryptocurrency options in 401k retirement plans. The previous guidance advised fiduciaries to exercise "extreme care" when adding such investments. EBSA's announcement today stated that this guidance was inconsistent with ERISA and deviated from the department's historically neutral approach to fiduciary investment decisions. Source: 401kspecialistmag.com DOL Rescinds 2022 Guidance Cautioning Against 401k Plan Investments in Cryptocurrencies On May 28, 2025, the DOL released Compliance Assistance Release No. 2025-01, which rescinds its previous Compliance Assistance Release No. 2022-1. The earlier guidance had cautioned 401k plan fiduciaries against including cryptocurrencies as direct investment options in their plans. By rescinding the 2022 guidance, the DOL adopts a more neutral position on cryptocurrencies, returning to its traditional practice of neither endorsing nor disapproving the inclusion of cryptocurrency investments in 401k plans. Source: Erisapracticecenter.com Trump-led DOL to Address ESG Rule Through Rulemaking Process The Trump-led DOL has filed a Status Report with the U.S. Court of Appeals for the Fifth Circuit regarding the litigation challenging the Biden-era ESG rule. The DOL plans to pursue changes or rescission of the current ESG regulation through a formal notice-and-comment rulemaking process, which will be included in its spring regulatory agenda. However, it remains unclear whether this process will involve rescinding the existing rule to revert to the Trump-era rule or if a new rule will be proposed entirely. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Fiduciary and Plan Governance Fiduciary Basics for New Plan Sponsors Retirement plan fiduciaries are individuals or entities responsible for managing and overseeing retirement plans, ensuring they act in the best interests of the plan participants. Under ERISA, fiduciaries must adhere to several key requirements, including acting prudently, diversifying plan investments, and avoiding conflicts of interest. Failure to comply with these requirements can result in legal liability and financial penalties for the organization. Therefore, organizations considering offering a retirement plan must understand fiduciary responsibilities to ensure compliance and protect plan participants. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers The Power of Small Data for Retirement Plan Sponsors As a plan sponsor, you likely dedicate a significant amount of time to managing various data processes, whether it's gathering, analyzing, or reporting information. This focus on data is essential, as data-driven decision-making holds immense value. While macro-level data, such as market trends, economic reports, asset manager white papers, and industry benchmarks, is crucial, are you effectively utilizing the "small data" available within your own organization? Source: Fiduciaryadvisors.biz »» Click here for More Studies, Research, and White Papers Items of Interest to Advisers or Other Service Providers A Big Reason the Vanguard "Crew" Is so 401k Proficient Karen Hart highlights Vanguard's employee education and credentialing strategy by emphasizing the term "crew," reflecting founder John Bogle's appreciation for naval history. This terminology underscores a collective commitment within the organization, ensuring that all staff are effectively onboarded, well-trained, and equipped with the necessary tools for long-term success. Source: Asppa-net.org Employee Education and Communications Text, Email and More: Why Employers are Taking a Multi-channel Approach to Benefits Communication Employers invest considerable resources in employee benefits to attract potential candidates and retain current employees. However, these efforts are ineffective if the benefits are not properly communicated. A recent survey by FinFit and HR Dive's studioID examined how organizations communicate their employee benefits, particularly those related to financial wellness. The findings provided several key insights that organizations can use to enhance their communication strategies regarding benefits. Source: Hrdive.com What to Tell Participants About Tapping Into Their Retirement Savings It's essential to discuss with participants the consequences of accessing money from their retirement plan, particularly during market downturns when borrowing or withdrawals can worsen financial challenges. While having access to retirement savings may provide reassurance, participants must make informed decisions. Plan sponsors should communicate the rules regarding withdrawals, suggest alternative emergency funds, outline potential financial implications, encourage seeking professional advice, and inform participants that unpaid loans may be considered taxable income. Source: Blackrock.com »» Click here for more Education and Communications Material Court and Legal The ERISA Burden of Causation and Objective Prudence in the Home Depot Case Before the Supreme Court The Supreme Court has requested guidance from the United States Solicitor General regarding the Home Depot excessive fee case, which involves allegations of fiduciary breaches related to underperforming BlackRock target-date funds and high managed account service fees. The case centers on the need to clarify which party in an ERISA lawsuit is responsible for proving that a fiduciary's breach caused financial losses to a retirement plan. The discussion here includes an examination of why participant-plaintiffs should carry the burden of proof concerning liability, causation, and damages under ERISA, and critiques the historical burden-shifting approach of the Solicitor and the DOL. Additionally, it addresses the often-overlooked issue of objective prudence in ERISA causation analysis. Source: Encorefiduciary.com On May 22, 2025, the Ninth Circuit Court of Appeals upheld the fiduciaries of Intel Corporation's retirement savings plans regarding the inclusion of private fund investments. The court ruled that ERISA's duty of prudence focuses on a fiduciary's decision-making process rather than evaluating performance in hindsight, emphasizing that comparing returns or fees alone does not prove imprudence. The ruling aligns with the DOL's stance that private funds can be included in a diversified investment portfolio. However, the lengthy litigation and the possibility of differing standards in other circuits may lead fiduciaries to be cautious without clear legal protections for including diversified funds with private market components. Source: Debevoise.com UBS Faces Latest 401k Forfeiture Lawsuit UBS is facing legal action regarding its handling of forfeited funds in its 401k plans, as detailed in a lawsuit filed in the U.S. District Court for the District of New Jersey. The case, Czakoczi v. UBS AG et al, alleges that the investment bank prioritized its interests by using forfeited funds to lower employer contributions instead of applying them toward plan expenses. This mirrors claims made in other lawsuits under ERISA, including a recent case against Cigna Group and a prior settlement involving Intuit Inc. Source: Plansponsor.com Another Suit Asserts Fiduciary Forfeiture Breach A lawsuit has been filed by participant-plaintiff Holly Hendrickson, represented by Lynch Carpenter LLP, against the fiduciaries of the Elevance Health 401k Plan. The suit alleges that the defendants violated ERISA by failing to properly manage the plan's expenses. Specifically, it claims they misused plan forfeitures to offset the company's future contributions instead of using those funds to lower administrative costs for plan participants. The company is accused of benefiting financially from this practice, resulting in millions of dollars in contribution expenses. Source: Napa-net.org »» Click here for more Court and Other Legal Issues Cyber and Plan Security A Plan Sponsor'S Guide to Navigating Participant Data Cyberthreats DC plans stand to gain significantly from advancements in technology and improved data sharing among service providers. However, the increasing prevalence of unauthorized data breaches and resulting class-action lawsuits has raised concerns among plan sponsors. A breach of sensitive participant data can have serious consequences for the plan, its fiduciaries, participants, and the sponsoring organization. This paper aims to help plan sponsors navigate today's dynamic data risk landscape by outlining vulnerabilities in participant accounts, reviewing updated regulatory guidance, and providing actionable steps for plan committees, in collaboration with their organizations, consultants, advisors, and legal counsel. Source: Dciia.org Mail vs. Wire Fraud: What's the Bigger Risk to Retirement Plan Balances? A recent lawsuit involves an employee suing a recordkeeper after their rollover check was stolen in transit. A reporter inquired about the frequency of rollovers and distributions through checks versus electronic methods, questioning why companies still opt for mailing checks given the risks of mail fraud. It's believed that mailing checks is considered safer than electronic transfers due to concerns about wire fraud, although there is no definitive data on this. To gather more insight, the PSCA sought feedback from members with its weekly Question of the Week mailing. Source: Psca.org NYC Man Lost $114,000 "His Entire 401k" After His Physical Check From Paychex Was Stolen and Cashed Dylan Handy, after switching jobs, attempted to roll over his $114,000 401k but faced issues when Paychex sent a paper check instead of an electronic transfer. The check was intercepted and fraudulently cashed, leaving Handy in a predicament where he might owe taxes on the stolen funds. The situation raises concerns about why retirement plan administrators still use physical checks and how individuals can safeguard their money to prevent similar issues. Source: Yahoo.com »» Click here for more on Cybersecurity Issues
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