Top 10 Fiduciary Misconceptions Among 401k Plan Sponsors
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In This Issue
Fiduciary and Plan Governance Top 10 Fiduciary Misconceptions Among 401k Plan Sponsors Abstract: While mistakes may result in fines and penalties, misconceptions can lead to bad results for the organization and its employees. Bad advice from a plan sponsor's trusted third party, whether intentional or negligent, can produce inertia and a lack of trust in the entire system. Here are the top 10 fiduciary misconceptions based on importance or what is most common. Source: Investmentnews.com (registration may be required) »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Employers Expanding Benefits Strategy to Meet Employee Needs Abstract: Faced with rising costs and continuing struggles to engage employees with their benefits, U.S. employers are expanding their overall corporate benefit strategy to better meet employee needs, according to a new survey by Willis Towers Watson. Aligning benefit offerings to the unique needs of different employee cohorts is one-way employers are striving to better engage employees with their benefits. Source: Plansponsor.com Understanding Behavioral Biases Can Help Plan Sponsors With Investing Communications Abstract: Advisers say being easily influenced by recent news is the No. 1 investor misstep, a survey found. Understanding these behavioral biases can help retirement plan sponsors with communications to retirement plan participants. Recognizing behavioral biases is an important first step to keep emotions in check and avoid missteps that may have a negative impact on long-term financial goals. Source: Plansponsor.com Considerations for Offering SDBAs in Retirement Plans Abstract: A recent report from Charles Schwab might give retirement plan sponsors reason to think about offering their participants a self-directed brokerage account, particularly one that offers the participants the service of an adviser. For example, Schwab found that while only 20% of participants in a brokerage window worked with an adviser as of the second quarter, their average balance of $448,515 was nearly twice as much as the $234,673 held by non-advised participants. Source: Plansponsor.com Abstract: A regulatory update that features a steady stream of cases from the courts, including multiple cases making their way to the United States Supreme Court for review as well as the lingering cases against colleges and universities that began in 2016. This update also includes new guidance from the regulatory agencies, including the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. Source: Multnomahgroup.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Three Lessons for Advisers From 401k and 403b Class Action Settlements Abstract: Retirement plan committees and financial advisers need to pay attention to class-action litigation and settlements to better manage their fiduciary risks. Some of the claims in those lawsuits are obvious; others foreshadow emerging issues that warrant attention and, at the least, an analysis of plan practices. Source: Natlawreview.com A New Direction for DOL Fiduciary Rulemaking Abstract: As early as this fall, we may see the DOL issue new guidance on rollovers (a significant and uncertain issue in the wake of the Fiduciary Rule's demise) and, in all likelihood, a proposed class exemption applicable to broker-dealers, which, at its heart, could condition relief on adherence to new Regulation Best Interest. It is not anticipated that the DOL will reformulate the ways in which one becomes an invest. advice fiduciary under ERISA. Source: Fiduciarygovernanceblog.com What Are Retirement Advisors Recommending? Abstract: NAPA recently asked a large group of retirement plan advisors which, of a wide range of services, they had proposed to their clients or prospects in the past year. They limited their choices to five to see which were the most popular, but automatic enrollment was the most recommended: 80% of this year's respondents had touted that feature, compared with 84% in last year's group. Source: Napa-net.org 403b Plans Four Ways to Improve 403b Plans Abstract: NTSA highlights opportunities that can help increase participation and savings for the nation's public education professionals in a new white paper that expands on the positive impact of four specific plan design features. Source: 401khelpcenter.com 403b Plan Fiduciary Breach Lawsuits Often Involve Multiple Active Recordkeepers Abstract: One of the common threads among the institutions that were sued over their retirement plans is that they had multiple recordkeepers available for active participant contributions. Out of the twenty-three lawsuits involving primarily the 403b plan of healthcare and/or higher education organizations, sixteen of them included the claim that the fiduciaries breached their responsibilities by allowing multiple recordkeepers to be active vendors in the plan. According to the lawsuits, having multiple providers allegedly led to significantly higher recordkeeping fees and subsequently lowered the account accumulations for the plan participants. Source: Cammackretirement.com »» Click here for More 403b Material Court and Legal Financial Engines and Alight Exit Home Depot ERISA Lawsuit Abstract: The Court's ruling addresses respective motions to dismiss filed by Alight Financial Advisors, Financial Engines Advisors, and the Home Depot defendants. In short, the court has granted the Alight and Financial Engines motions to dismiss, in which the defendants argued they are not, given their contracted roles and inability to set their own compensation levels as service providers, liable for the fiduciary breach claims alleged in the suit. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Senate Okays Scalia as New Labor Secretary Abstract: The nomination of Eugene Scalia to serve as head of the Labor Department was approved Sept. 26 by the Senate in a 53-44 vote. The Senate Health, Education, Labor, and Pensions Committee endorsed Scalia's nomination Sept. 24 in a 12-11 party-line vote. The committee held a three-hour hearing Sept. 19 at which the nominee was questioned on a wide range of labor-related topics. Source: Asppa.org House-Approved Bill Preventing 'Forced' Arbitration Could Impact Retirement Plans Abstract: Many retirement plans include provisions requiring employees and plan participants to arbitrate any disagreements they may have with the employer or plan fiduciaries before they could take a dispute to court to seek resolution. However, the Forced Arbitration Injustice Repeal Act (H.R. 1423) approved Sept. 20 by the U.S. House of Representatives would prohibit pre-dispute arbitration agreements from being valid or enforceable if they require arbitration of an employment, consumer, antitrust or civil rights dispute. As such, it appears that the legislation, if enacted, would apply broadly to employee benefit plans, including DC and DB plans. Source: Ntsa-net.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Five Things Plan Sponsors (Still) Screw Up Abstract: Plan sponsors have a lot of responsibilities and often rely on others to help them keep their plan operating in accordance with the law. And yet, even with the most attentive plan sponsors, mistakes (still) occur. Here's a list of some of the most common missteps. Source: Napa-net.org Final Hardship Distribution Regulations: Implementation Considerations Abstract: The IRS recently released final regulations making a number of significant changes to the rules applicable to hardship distributions from 401k and 403b plans. This article focuses on two specific issues: (1) the elimination of the six-month suspension of contributions following a hardship distribution; and (2) the revised standard used to determine whether a hardship distribution is necessary to meet the financial need. Source: Erisapracticecenter.com Deadlines to Deposit Elective Deferrals Abstract: The DOL's top compliance concern is the timely deposit of employee salary deferrals to their respective plans. Plan sponsors and service providers must ensure policies and procedures are in place to ensure deferral deposit deadlines are met. This table summarizes the DOL's deferral deposit deadlines for various plan types. Source: Retirementlc.com »» Click here for more Compliance and Regulatory Material Marketplace News Will Schwab Launch a Robo for Employer 401ks? TRA Announces the Acquisition of Two Retirement Groups Creative Planning Acquires Retirement Plan Provider America's Best 401k Vanguard Pilots Digital-Only (Robo) 401k Advice Product Wasatch Advisors Rebrands as Wasatch Global Investors »» Click here for More Marketplace News
This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted. Articles are copyrighted to their publishers. If you believe that your work has been copied in a way that constitutes copyright infringement, please contact the source site immediately. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto. All links were tested before this eNewsletter was e-mailed to you to ensure that they are still functional, but publishers do move or delete articles. Therefore, we can't guarantee that the links provided will remain operational. 401khelpcenter.com does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Opinions expressed are those of the author of the article and do not necessarily reflect the positions of 401khelpcenter.com. THIS NEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT, TAX, ACCOUNTING, OR LEGAL ADVICE. Copyright © 2019 by 401khelpcenter.com, LLC. All rights reserved. No reproductions without prior authorization, but you are free to email this copy (in its entirety) along to colleagues or clients. This newsletter may not be posted to any website. 401khelpcenter.com, LLC
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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
Insight: Studies, Research, and White Papers DC Plan Hacks: Tips for an Efficient Design Abstract: To best serve employees, DC plans need to evolve to meet the changing needs of the workforce and respond to the shifting regulatory landscape. For instance, the Baby Boom generation may require a greater focus on decumulation strategies, while the Generation X cohort may need more savings options, and those in the Millennial generation may look for help in saving more. A top-tier DC plan is vital to offering a competitive benefits package that meets the organization's goals and helps it recruit the best employees. This article outlines some new features that sponsors should consider for their plans. Source: Callan.com Maximizing Plan Design to Drive Better Outcomes Abstract: A successful retirement plan program encourages and enables its participants to build sufficient retirement savings, choose the appropriate investments, manage investment risk, and generate a lifetime of income. Although there exist nearly as many retirement plan structures as individuals who participate in them, not all plans are created equal and plan design can significantly influence savings and retirement decisions. However, due to the number of options available, plan design can be a complex undertaking. Learn more about the plan design features that will boost your plan participants' readiness for retirement. Source: Planpilot.com »» Click here for More Studies, Research, and White Papers General Items Help for Employees Falling Behind on Retirement Savings Abstract: Educating employees about the power of time on their savings, encouraging them to log into their retirement plan accounts and starting them at a higher deferral rate are some ways employers can help boost employees' retirement savings. Source: Plansponsor.com Could There Be Unintended Consequences to Putting Off Retirement? Abstract: Mandatory retirement policies are mostly illegal in the US, but their disappearance has become a point of concern for those worried about future generations. Source: Hrdive.com Fiduciary and Plan Governance The Importance of Implementing Retirement Plan Best Practice Standards Abstract: The relevance of fiduciary best practice standards for retirement plan sponsors is rather intuitive, given that legal and performance pressures endured by companies are tremendous, coming from multiple directions and for various reasons. A shift towards a heightened awareness of fiduciary responsibilities and "what not to do" can be seen in many recent ERISA lawsuit settlements alleging breaches in fiduciaries duties, but perhaps none more so than that of ATH Holding Company. Source: Schneiderdowns.com The Real Fiduciary Threat for Smaller 401k Plans Is a Government Audit Abstract: There have been probably more men who landed on the moon than small- or medium-sized 401k plan who have been sued in a class action claim. Good fiduciary practices are necessary, but the real fear that they should be talking about and that you're more than likely ill-prepared for is an IRS or DOL audit. This article is all about the risk of a government audit and what trouble it may get you into. Source: Jdsupra.com Employee Agreements: A Method for Mitigating ERISA Fiduciary Exposure? Abstract: Employment agreements cover a wide range of topics, from setting the compensation terms to protecting a company's intellectual property rights. It's not surprising, then, that plan fiduciaries put terms in employment agreements aimed at limiting their exposure. The goal is to limit litigation and instead require arbitration for resolving ERISA claims. They may also choose to try to limit the claims period or set the jurisdiction in which the claims are heard. Whether or not these limitations are allowed is still a topic being debated by the courts. Source: Hallbenefitslaw.com ERISA Fiduciary Acts May Include Failing to Accurately Advise Plan Participants and Beneficiaries Abstract: On July 24, 2019, the United States Court of Appeals for the Fourth Circuit held in Dawson-Murdock v. Nat'l Counseling Group that being an ERISA plan's "named fiduciary" is sufficient to allege fiduciary status for virtually any ERISA fiduciary claim. The court also applied an expansive definition of functional fiduciary status that may encompass acts that are carried out by the plan's administrative staff. Source: Slevinandhart.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers Are 401k Advice Fees Headed to Zero? Abstract: Vanguard Group has thrown down the gauntlet on costs for 401k managed accounts. The asset manager plans to launch a digital-only financial planning and automated investing service for 15 basis points. The service, Vanguard Digital Advisor, which will be available to 401k plan participants and retail investors, undercuts the cost of pretty much every 401k robo-adviser on the market, as well as that of many target-date funds. Source: Investmentnews.com (registration may be required) Court and Legal Second Lawsuit Filed Against SEC Advice Rule Abstract: On September 11, 2019, XY Planning Network filed a lawsuit against the United States Securities and Exchange Commission to invalidate its new fiduciary standards, known as the Regulation Best Interest Rule. The plaintiffs argue that the regulation fails to meet standards imposed under the Investment Advisers Act of 1940, and frustrates the intent of the Dodd-Frank Act. Source: Ascensus.com Safeway, Aon Hewitt Settle Excessive Fee Lawsuit for $8.5 Million Abstract: Safeway and Aon Hewitt Investment Consulting have reached an agreement to settle a class-action lawsuit claiming participants in Safeway's 401k plan were charged excessive fees. Safeway and Aon Hewitt will pay a combined $8.5 million to settle the lawsuit, according to court documents filed Sept. 13 in U.S. District Court in Oakland, CA. Source: Pionline.com A Ninth Circuit Ruling Repaves the Intersection of ERISA and Arbitration Law Abstract: Breach of fiduciary duty claims that "arise out of" and "relate to" a 401k plan -- including those brought on behalf of the plan itself -- are bound by the plan's arbitration provisions. With its ruling, the court overruled the 1984 Ninth Circuit case, Amaro v. Continental Can Co., which held that claims under ERISA could not be arbitrated. Source: Jdsupra.com »» Click here for more Court and Other Legal Issues State-Based Retirement Programs Feds Say CalSavers Program Preempted by ERISA Abstract: A lawsuit challenging California's auto-IRA program for private-sector workers just got the backing of the federal government. Last month the Department of Justice asked a federal court to hold off ruling on a suit challenging California's auto-IRA program for private-sector workers. Source: Asppa.org Compliance and Regulatory Abstract: At a recent meeting of the Department of Labor's 2019 Advisory Council on Employee Welfare and Pension Benefit Plans, American Retirement Association Chief Content Officer Nevin Adams offered a look at a new ARA effort to help plan sponsors better understand and fulfill their obligations as sponsor and fiduciary and improve the financial statement audit process. Source: Asppa.org The Hardship Regulations are Final Abstract: On Thursday, September 19th, the IRS finalized the hardship regulations that were previously issued in proposed form on November 9, 2018. While finalized regulations often differ from proposed regulations, due to the IRS considering written comments, these final regulations contain no substantive changes. There are, however, some issues raised by the IRS in the final regulations that are worthy of note. Source: Cammackretirement.com DOL Provides Guidance on Retirement Plan Obligations When Employees Return From Military Service Abstract: The Department of Labor recently issued a fact sheet intended to help employers understand their retirement plan obligations under the Uniformed Services Employment and Reemployment Rights Act of 1994. The law provides that eligible employees that return to employment following qualified military service must be treated as though their military service was not a break in service for purposes of participation, vesting and benefit accrual under their employer's retirement plan. Source: Benefitslawadvisor.com »» Click here for more Compliance and Regulatory Material
This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted. Articles are copyrighted to their publishers. If you believe that your work has been copied in a way that constitutes copyright infringement, please contact the source site immediately. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto. All links were tested before this eNewsletter was e-mailed to you to ensure that they are still functional, but publishers do move or delete articles. Therefore, we can't guarantee that the links provided will remain operational. 401khelpcenter.com does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Opinions expressed are those of the author of the article and do not necessarily reflect the positions of 401khelpcenter.com. THIS NEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT, TAX, ACCOUNTING, OR LEGAL ADVICE. Copyright © 2019 by 401khelpcenter.com, LLC. All rights reserved. No reproductions without prior authorization, but you are free to email this copy (in its entirety) along to colleagues or clients. This newsletter may not be posted to any website. 401khelpcenter.com, LLC
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