DOL to Issue New Rules on Fiduciary Duties: Acosta
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In This Issue
Items of Special Interest to Service Providers DOL to Issue New Rules on Fiduciary Duties: Acosta Abstract: Labor Secretary Alexander Acosta signaled that the Labor Department will issue new fiduciary-related rules. In an exchange during an oversight hearing held by the House Education and Labor Committee, Rep. Marcia Fudge questioned Acosta on Labor's fiduciary plans. Acosta said that Labor is collaborating with the Securities and Exchange Commission as it works on its advice-standards package, which includes Regulation Best Interest, and that "based on our collaborative work, we will be issuing new rules in this area." Source: Thinkadvisor.com Fiduciary and Plan Governance The Benefits of Simplifying DC Plan Investment Menus Abstract: Simplifying DC plan investment menus could encourage more employees to participate in the plan, sources say. When simplifying a fund menu, the sophistication of participants and the investment committee is a key driver. It will inform whether the plan should offer sophisticated asset classes or managers that will make the asset class decisions. Source: Planadviser.com 401k Mutual Funds -- Pay Attention to Share Class Abstract: Mutual fund companies usually make their funds available to 401k plans in multiple share classes. While all classes hold the same underlying securities, they can charge very different fees. In general, employers have a fiduciary responsibility to choose the lowest-priced share class available to their 401k plan so participant investment returns aren't reduced unnecessarily by avoidable fees. To meet this fiduciary responsibility, employers must be capable of evaluating share class fee differences. Source: Employeefiduciary.com Including ESG Funds in a 401k Plan Fund Menu -- Fiduciary Considerations Abstract: There is a growing interest in including funds that emphasize environmental, social, and governance factors in 401k plan investment menus, in response (in part at least) to participant interest in these funds and the increased participant engagement they generate. What issues does inclusion of an ESG fund in the plan's fund menu raise for plan fiduciaries? Source: Octoberthree.com Fiduciary Insurance and Fidelity Bond Coverage Abstract: Plan Administrators often ask me to explain the difference between a fidelity bond, which is required, and fiduciary liability insurance, which is optional. These coverages are not the same and it is important to understand the difference between them. Source: Consultrms.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers 401k Loan Usage Reaches Nine-Year Low: Study Abstract: The use of 401k loans reached a nine-year low of 22.5% in 2018, and continued a steady six-year decline of nearly 10%, according to T. Rowe Price's annual participant data benchmarking report, Reference Point. The report also found that the percentage of participants who took a hardship withdrawal fell for the ninth consecutive year, declining from 1.9% in 2010 to 1.3% in 2018. Meanwhile, both loan balances and the average amount of hardship withdrawals increased. Source: Troweprice.com QDIA Evolution -- Moving Defined Contribution Plans Into the Future Abstract: With 81% of employers offering only defined contribution plans to new hires, the stakes have never been higher for DC plans to facilitate successful retirement outcomes for American workers. This will require coordination across plan design, investment design, and communications. From an investment perspective, the qualified default investment alternative is the most direct way to impact retirement readiness given the increase in auto-features such as automatic enrollment (recent data show that 73% of plans automatically re-enroll versus 52% in 2009). Source: Willistowerswatson.com Average Deferral Rates Reach 10-Year High of 8.6% Abstract: T. Rowe Price has released its annual participant data benchmarking report, Reference Point, which shows mixed results for participants in 2018. On the positive side, average deferral rates reached a 10-year high of 8.6%, outstanding 401k loans fell to a nine-year low of 22.5% and hardship withdrawals fell for the ninth year in a row, from 1.9% in 2010 to 1.3% in 2018. Source: Planadviser.com »» Click here for More Studies, Research, and White Papers Court and Legal Plaintiffs Get Reprieve in Excessive Fee Case Abstract: The plaintiffs in an excessive fee case have managed to keep their case alive on appeal, in a case that also has an intriguing dissenting opinion. The suit was not only one of the first of the university 403b excessive fee suits to be filed, the district court decision, in favor of the fiduciary defendants for the University of Pennsylvania Matching Plan, had been cited in a number of these cases, including those that had been settled. Source: Ntsa-net.org »» Click here for more Court and Other Legal Issues Cyber and Plan Security Is Cybersecurity an ERISA Fiduciary Responsibility? Abstract: Plan sponsors and service providers already take seriously their responsibilities to protect participant data, but where are the lines of responsibilities and accountability in the event of a breach? Source: Napa-net.org SPARK Clears Up Definitions for Retirement Plan Cybersecurity Abstract: Reading the words "cybersecurity breach" and "cyber fraud" on the news, email, or in general can alone cause panic. But what constitutes a security breach, and how a recordkeeper should inform a plan sponsor about cyber-related events continue to be unclear throughout the industry. The SPARK Institute's Data Security Oversight Board worked with definitional examples from national cyber standards, international regulations, state privacy laws, and client contracts and gathered insights from the plan consultant representatives on the board. Source: Planadviser.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory IRS Expands Determination Letter Program - Revenue Procedure 2019-20 Abstract: In 2018, the IRS requested comments on the potential expansion of the scope of the determination letter program for individually designed plans. On May 1, 2019, the IRS issued Revenue Procedure 2019-20 which describes two additional limited situations in which plan sponsors may request determination letters. Source: Wagnerlawgroup.com IRS Expands Self-Correction Program Primarily to Facilitate Plan Loan Corrections Abstract: The IRS recently provided some welcome relief by expanding the types of failures eligible for self-correction. Revenue Procedure 2019-19, which contains an updated Employee Plans Compliance Resolution System, provides that certain plan document and operational failures, including some plan loan failures, may now be corrected through self-correction, without the added burden and expense of making voluntary correction program filings with IRS. Source: Groom.com Fiduciary Rule Remnants: The Strange Case of Field Assistance Bulletin 2018-02 Abstract: Although DOL and the IRS will not bring enforcement actions against fiduciaries working diligently and in good faith to comply with the impartial conduct standards, FAB 2018-02 does not address the rights or obligations of other parties. It is possible that participants in plans subject to ERISA, along with plan fiduciaries, may be able to bring claims against a fiduciary that is engaging in transactions without an applicable exemption. Source: Klgates.com Seven Things Employers Should Know About DOL Investigations Abstract: This article will focus on lessons learned from recent DOL investigations of defined benefit plans. While defined benefit plans are the focus, many of the lessons are equally applicable to investigations of other types of retirement plans, as well and health and welfare plans. Source: Thompsoncoburn.com »» Click here for more Compliance and Regulatory Material Marketplace News Bronfman Rothschild Closes Sale to Sontag Advisory 2019 Signature Award Winners Honored at PSCA National Conference »» Click here for More Marketplace News
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