TPA Schemer Caught Stealing $3.3 Million
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Newsletter Sponsor Are all $5,000,000 401k Plans Created Equal? The findings might surprise you. This visually appealing infographic was created by using data from the 401k Averages Book to compare the average costs of two $5,000,000 401k plan benchmarks. Click here to receive a copy of the infographic and see what we found out. In This Issue
Court and Legal TPA Schemer Caught Stealing $3.3 Million Abstract: A "third-party administrator fee" was used to skim more than $3.3 million from employees' paychecks. From 2013 through 2017, some 300 workers at Plainville, CT-based Ferguson Electric and Ferguson Mechanical Ferguson had deductions of some $1.60 to $3.15 per hour taken from their fringe benefits package as a "third-party administrator fee" for the employees' pension plans. Source: Napa-net.org Fidelity Dogged Again by 401k Quid-Pro-Quo Allegations Abstract: Fidelity Investments has again been accused of engaging in a quid-pro-quo type relationship with a 401k plan sponsor, which allegedly cost employee retirement savers millions of dollars in return for bigger profits. The latest episode involves the Massachusetts Institute of Technology, which has been accused of retaining Fidelity's 401k record-keeping services and investment funds, despite counsel to do otherwise from attorneys and consultants, with the expectation that Fidelity and co-owner Abigail Johnson would make a large donation to the university. Source: Investmentnews.com (registration may be required) Plan Administrator Deemed an ERISA Fiduciary Abstract: The Fourth Circuit Court of Appeals, in Dawson-Murdock v. Nat'l Counseling Group, Inc., has allowed a life insurance beneficiary to sue her husband's employer for breach of fiduciary duties concluding that she had sufficiently alleged that the employer was an ERISA fiduciary. Source: Wagnerlawgroup.com »» Click here for more Court and Other Legal Issues Fiduciary and Plan Governance Vendor Fees: The Importance of RFPs Abstract: Investment advisor and recordkeeper searches are a very important aspect of the fiduciary duty of "procedural prudence," i.e., setting up and carrying out prudent processes that are intended to render beneficial results for participants. They provide 401k and 403b plan fiduciaries the opportunity to ensure not only that fees are reasonable, but also that the appropriate services, technology, and education are being provided to the plan participants. Source: Sgrlaw.com The Correct Approach for Controlling Retirement Plan Fees Abstract: When employees file complaints against their employers with the U.S. Department of Labor, fees for their retirement plan services is a very common reason. A burgeoning era of employee activism is underway in which plaintiff lawyers are finding fertile ground for litigation opportunities, catching many employers unprepared. Many other employers are ready, however, using an approach that offers a legally defensible result. Source: Rolandcriss.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Who Participates in Retirement Plans Abstract: Increasing the share of workers who participate in retirement plans has been a primary focus of retirement policy. As the retirement industry and policymakers try to increase participation, it is important to understand which workers currently participate in employer-sponsored retirement plans and why certain employers offer, and certain employees desire, compensation in the form of retirement benefits. This 32-page report uses newly available data -- tabulations of administrative tax data published by the IRS Statistics of Income Division -- to analyze participation in employer-sponsored retirement plans. Source: Ici.org Retirement Plan Participation Continues to Increase Abstract: American workers' participation in employer-sponsored retirement plans is significantly higher than suggested by the most commonly cited statistics, with nearly two-thirds of workers between ages 26 and 64 participating in such plans, either directly or through a spouse, according to a new study by the Investment Company Institute. Source: Ici.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Report Says Rocky Road Ahead for Recordkeepers Abstract: While it's not exactly been a smooth road over the past couple of decades, a new report says an even bumpier ride could be ahead for recordkeepers. A report from McKinsey & Company notes that while the 10-year bull market has propelled DC asset levels, recordkeepers have had to navigate a series of structural shifts in the market that have pressured their economics. Source: Napa-net.org 403b Plans Time is Running out for 403b Plan Sponsors to Meet March 31, 2020, Adoption Deadline Abstract: In Revenue Procedure 2017-18, the IRS announced a deadline of March 31, 2020, for adopting pre-approved 403b plans in order to receive retroactive relief for any noncompliant plan provisions. Shortly thereafter, it began issuing opinions on plans submitted by sponsors of volume submitter and prototype 403b plan documents. Source: Benefitsnotes.com Texas 403b Law Causes Adviser Concern Over Investor Protection Abstract: A Texas law taking effect next month is causing concern among some retirement plan advisers who are worried that the legislature has weakened investor protection for public school teachers in the state. Law taking effect Sept. 1 eliminates fee caps in place on some retirement products for teachers. Source: Investmentnews.com (registration may be required) »» Click here for More 403b Material Plan Automation DOL Gives 401k Auto Portability Major Boost Abstract: The auto revolution in retirement plans (auto-enrollment, escalation, deferral) adds another option with the release last week of the DOL's final Prohibited Transaction Exemption for auto portability. Source: 401kspecialistmag.com »» Click here for more on Automatic 401k Plan Features State-Based Retirement Programs Feds May Weigh in on CalSavers Suit Abstract: The Department of Justice has asked a federal court to hold off ruling on a suit challenging California's auto-IRA program for private-sector workers. The suit in question is a challenge by the Howard Jarvis Taxpayers Association, claiming that the California Secure Choice Retirement Savings Trust Act, which establishes the CalSavers auto-IRA program for private-sector workers "violates the Supremacy Clause of the United States Constitution because it is expressly preempted by the Employee Retirement Income Security Act of 1974...." Source: Napa-net.org Connecticut Retirement Security Authority: Helping 600,000 Workers Save for Retirement Abstract: Following the path of state governments such as California, Oregon, and Illinois, Connecticut has enacted the Connecticut Retirement Security Program to help address the challenges surrounding the retirement savings of workers in the state. The new state-mandated program, overseen by the Connecticut Retirement Security Authority (CRSA), stems from legislation that was enacted back in 2016 with the intent of helping more employees save for their retirement. Source: Humaninterest.com Compliance and Regulatory Quick Fixes for a 401k Plan Sponsor's Errors and Problems Abstract: The beauty of 401k plans is that no matter the problem that a plan sponsor may have, there is a rational solution to that problem. The only problem is that most plan sponsors are unaware of these fixes because they're unaware that what they have in their 401k plan may be a problem. This article is about quick fixes that a 401k plan sponsor may utilize to fix a problem they should be aware of. Source: Jdsupra.com Rollover Period for Retirement Plan Loan Offsets Abstract: If a participant defaults on a retirement plan loan after they separate from service, the plan will "offset" the outstanding balance of the loan, deducting it from the participant's account and treating it as a distribution. Prior to the Tax Cuts and Jobs Act of 2017, if a participant wanted to defer taxes on that unpaid loan balance, they had 60 days to roll the cash value to another eligible retirement plan or IRA. With the update in December 2017, that deadline was extended to the due date for the participant's tax return, including extensions, for the year in which the loan offset occurred. Source: Fidelity.com A Simple Guide to 401k Participant Disclosures Abstract: The table here outlines the general annual notices and deadlines for distribution. Financial advisors and plan sponsors should always work with qualified plan consultants to ensure that the plan is meeting all compliance regulations that pertain to their specific plan. There are other notices that may be required depending on the specifics of the 401k plan. It's important to stay on top of these required notices to avoid penalties and to ensure that employees have up-to-date information to make informed investment choices. Source: Rpgconsultants.com »» Click here for more Compliance and Regulatory Material Marketplace News F&M Trust Consolidates Retirement Business With BPAS 401k Provider Human Interest Raises $15.4 Million Series B »» Click here for More Marketplace News
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