DOL 2018 Enforcement Statistics: A Wakeup Call for Complacent Fiduciaries
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In This Issue
Fiduciary and Plan Governance DOL 2018 Enforcement Statistics: A Wakeup Call for Complacent Fiduciaries Abstract: Convincing some fiduciaries of the need to do plan compliance reviews can be a hard sell. Unlike ERISA reports and required notices, self-audits don't have a fixed deadline and there isn't any statutory penalty for not completing them. Department of Labor enforcement activity resulted in higher recoveries in 2018 than in 2017. Plan fiduciaries should be paying attention. Source: Cohenbuckmann.com The Wrong Reasons for Changing Your 401k Plan Provider Abstract: There are many reasons why a 401k plan sponsor may want to change a retirement plan provider, but it should be for the right reasons. This article is about avoiding some really bad reasons. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Participant Loan Leakage: Protecting Participant Accounts and Reducing Fiduciary Risks Abstract: Plan sponsors may have a false sense of security when it comes to the fiduciary risk related to 401k loans. What they may not recognize is that participant loans are plan investments and must be managed with the same prudence and oversight required for any plan investment. The risk is heightened by several factors: the increased focus on 401k plans as a source of litigation; an alarming rate of loan defaults, as reflected in academic and industry studies; and a misguided belief that disclosure provides adequate protection. This 6-page paper explores these issues. Source: Loaneraser.com Abstract: The 2018 ERISA Advisory Council examined the effectiveness of the DOL's regulations and sub-regulatory guidance under section 412 of ERISA, which requires that an employee benefit plan purchase a fidelity bond to protect against losses to plan funds or other property caused by acts of fraud or dishonesty. In particular, the Council focused its inquiry on whether changes to the regulations and sub-regulatory guidance implementing section 412 of ERISA could improve compliance and thereby enhance the safeguarding of plan funds or other property from acts of fraud or dishonesty. This is their 15-page report on the topic. Source: Dol.gov Lifetime Income Solutions as a QDIA -- Focus on Decumulation and Rollovers Abstract: The 2018 ERISA Advisory Council's objective was to focus recommendations on promoting lifetime income within DC plans through changes to the annuity selection safe harbor and modifying the Qualified Default Investment Alternative rule to focus on asset accumulation and decumulation issues in the context of LTI needs and solutions. This is their 44-page report on the topic. Source: Dol.gov »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers 401k Advisers Are Battling on Multiple Fronts Abstract: Advisers specializing in the retirement-plan business are engaged in battle on multiple fronts and none of the conflicts have easy answers. Though specialist 401k advisers have been able to show value with current clients and hold their fees steady over the last few years, they have also had to change their fee structure from 100% asset-based to fixed fees and a-la-carte pricing, positioning themselves as an "outsourced chief retirement officer." Source: Investmentnews.com (registration may be required) From Diligence to Delivery: Capturing Value From Retirement Recordkeeping M&A Abstract: Given the US defined-contribution market's abundance of competitors, pricing pressure, and the IT-intensive nature of the business, it is no surprise it has gradually consolidated over the past decade. And this consolidation in the US retirement arena continues apace. To maximize deal value, firms must follow some industry-specific best practices. Source: Mckinsey.com 403b Plans PSCA Launches 403b Benchmarking Survey Abstract: The Plan Sponsor Council of America is giving retirement plan sponsors at nonprofit organizations an opportunity to participate in, and receive benchmarking data from, its annual 403b Benchmarking Survey. Embarking on its second decade, the survey is designed to provide benchmarking data on 403b plans, including deferral levels, plan features, investment options and other information to help plan sponsors evaluate their own plans. Source: Napa-net.org One Year to Go Until the 403b Restatement Deadline Abstract: The one-year countdown to the mandatory 403b plan document restatement deadline is officially underway. All organizations that sponsor 403b retirement plans must restate their plan documents by March 31, 2020, using either the IRS's pre-approved document or an individually designed plan document. Source: Cbiz.com »» Click here for More 403b Material Court and Legal Tussey v. ABB Closes With $55 Million Settlement; Complex Case Changed Views of Fees, Fiduciary Duty Abstract: Tussey v. ABB, after winding through earlier settlement awards to the plaintiffs, two appellate hearings in the 8th Circuit, and double rejections by the U.S. Supreme Court, ultimately will be remembered both as a case about plan sponsors' fiduciary duties and one that defined how to quantify participant losses from related breaches. As a result, the retirement plan industry has moved in a unified way to press for reductions in service provider fees, opt for lower-cost share classes, and insist upon greater transparency for recordkeeping and asset management costs. Source: Blr.com District Court Again Allows Safeway ERISA Lawsuits to Proceed Abstract: The district court rules Safeway's dismissal motions conflate the principle that investment decisions should not be evaluated based on hindsight with the need to use historic information available at the time the decision was made. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Richard Thaler Wants to Use 401ks to Boost Social Security Payments Abstract: Nobel laureate Richard Thaler wants to mesh 401k plans with Social Security benefits to help Americans simplify what is perhaps their most daunting and complex financial issue: drawing down retirement assets. Source: Investmentnews.com (registration may be required) Sixteen Retirement Plan Provisions in the SECURE Act Abstract: Employee benefits consulting firm Strategic Benefits Advisors helpfully -- and succinctly -- lists the provisions of the bipartisan Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which was advanced by the House Ways and Means Committee on April 2. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions State-Based Retirement Programs CalSavers Pilot for State-Sponsored Retirement Program Begins With 20 Businesses Abstract: California has begun a pilot program for a state-sponsored retirement savings plan for businesses to offer employees. CalSavers has a tiered registration and implementation deadline for various sized businesses and its goal is to help offset the retirement savings crisis in the United States. Source: Paychex.com Compliance and Regulatory Time for a 401k Plan Spring Cleaning? Abstract: Now that spring is in the air, it might be a good time to dust off your 401k plan document and do a quick checkup. This article walks through five issues we recommend considering as you jump into your spring cleaning. Source: Laboremploymentperspectives.com New Self-Correction Opportunities for 401k Plan Loans and Other Retirement Plan Errors Abstract: The IRS issued an update to its retirement plan correction program that significantly expands the errors that can be corrected without filing with the IRS or paying a filing fee. Most importantly, many plan loan errors can now be self-corrected. For example, if loan payments are missed but the maximum loan term (generally 5 years) has not yet expired, the loan can be corrected by repaying it in full or reamortizing it over the original maximum loan term. This is the case even if the loan's normal cure period has already expired. An IRS filing is no longer required to correct a loan in this way. Source: Sgrlaw.com »» Click here for more Compliance and Regulatory Material
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