Retirement Plan Committee's Prudent Process Defeats DOL
|
In This Issue
Fiduciary and Plan Governance Retirement Plan Committee's Prudent Process Defeats DOL A recently released case highlights the protection afforded by a retirement plan committee that takes its role seriously. In Scalia v. WPN Corp., a Pennsylvania federal court ruled that the U.S. Department of Labor was wrong in its insistence that retirement committee members were liable under ERISA for failing to monitor the committee's investment manager. Source: Carltonfields.com Is Mandatory Individual Arbitration Another Tool for the Plan Design Toolbox? Recent decisions by the US Court of Appeals for the Ninth Circuit have reinvigorated the debate over whether mandatory individual arbitration provisions are enforceable with respect to ERISA claims and, if so, whether these provisions are worth including in your ERISA plan document. Source: Morganlewis.com Missing and Unresponsive Participants in ERISA Plans: Current Challenges and Recommendations This so-called "missing participant" issue arises when a retirement plan cannot locate these individuals, or they are unresponsive to the plan's efforts to encourage them to start payment. The issue of missing participants in ERISA plans has been the subject of investigations by the Department of Labor and the focus of other regulators, including the Internal Revenue Service. In light of this increased regulatory focus, plan sponsors may want to take steps to ensure that they understand their fiduciary duties regarding missing participants and the Department's position on these duties. Source: Morganlewis.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers How Would 401k "Rothification" Alter Saving, Retirement Security, and Inequality? This 4-page paper explores how "Rothification" might influence household consumption, saving, retirement patterns, and tax-payments, using a richly detailed and state-of-the-art life-cycle stochastic dynamic model with endogenous work effort, portfolio choice, consumption, saving, and Social Security claiming patterns. We also evaluate how outcomes will vary for workers with different lifetime earnings profiles (proxied by worker-types differentiated by sex and education). Last, it assesses what changes if the economy moved away from the current low-interest rate environment and returned to a more "normal" regime. Source: Mrdrc.isr.umich.edu »» Click here for More Studies, Research, and White Papers 403b Plans IRS Provides Remedial Amendment Period for Correcting 403b Plan Defects IRS has issued guidance establishing remedial amendment periods for retroactive correction of form defects in individually designed and prototype 403b plans and has established a system of plan cycles for submission of prototype 403b plans for review and approval. Source: Buck.com »» Click here for More 403b Material Court and Legal Supreme Court Considering Three ERISA Cases in October Term 2019 The Employee Retirement Income Security Act has generated numerous U.S. Supreme Court decisions since its enactment, and this year's term is no exception. The Court is currently considering three ERISA cases involving a range of significant issues. Source: Truckerhuss.com Sutherland Global Services Accused of ERISA Fiduciary Breaches A group of participants in the Sutherland Global Services Inc. 401k Plan has filed a proposed class-action ERISA lawsuit against their employer in the U.S. District Court for the Western District of New York. The lawsuit names as defendants Sutherland Global Services Inc. and CVGAS LLC, doing business as Clearview Group. The complaint also directly names as defendants several Sutherland's senior leaders who are plan fiduciaries, along with some 20 John and Jane Doe defendants. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Technical Amendments Bill Changes Taxation of Puerto Rico Retirement Plan Distributions On November 19, 2019, House Bill No. 2172 (HB 2172), which intends to incorporate technical amendments to the Puerto Rico Internal Revenue Code was approved by the Puerto Rico Legislature and sent to the Governor for approval. This article summarizes significant amendments that would be made by HB 2172 to the PR Code provisions on qualified retirement plans. Source: Mcvpr.com Legislation Would Allow 401k Withdrawals to Pay LTC Premiums An influential U.S. Senator is preparing legislation that would allow tax- and penalty-free withdrawals to pay for long-term care insurance. The draft legislation that will be introduced in the coming weeks would also allow up to $2,000 in withdrawals annually per individual to be excluded from income tax, provided the amount is used to pay for qualified LTC insurance for the individual, their spouse or a dependent. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Retirement Plan Sponsors Need Strong Cybersecurity Defenses The two areas of cybersecurity defense that sponsors should be mindful of are breaches and fraud. A breach is where there is a compromise to your information systems, and there is a large extraction of data. Fraud is when that data is used to perpetrate a financial crime. Should a breach or fraud occur, a sponsor could be liable if the claimant establishes that it failed to follow a prudent process to safeguard the plan data. Source: Plansponsor.com Mitigating Retirement Account Fraud: Best Practices to Safeguard Participant Assets The trend of commercial database breaches involving the disclosure of personally identifiable information does not appear to be slowing down. Recent large scale PII breaches of other companies can negatively impact your retirement plan and participants. Cybercriminals are becoming more sophisticated and with the glut of PII available to them, in combination with other techniques such as phishing and malware, retirement accounts are being put at risk of fraudulent access and distribution of funds. As a retirement plan sponsor and fiduciary, there are steps you should take to mitigate the risk of fraud from occurring within your plan. Source: Newportgroup.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory As the end of the year approaches, employers should be aware of important year-end deadlines and considerations related to their retirement and health and welfare plans. This is a list of those deadlines and provides guidance on how to comply with recent plan changes. Source: Huschblackwell.com DOL Releases Advance Copies of Form 5500 Annual Return/Report for 2019 The DOL's Employee Benefits Security Administration, the IRS, and the Pension Benefit Guaranty Corporation today released advance informational copies of the 2019 Form 5500 Annual Return/Report and related instructions. The "Changes to Note" section of the 2019 instructions highlights important modifications to the Form 5500 and Form 5500-SF, as well as to their schedules and instructions. Source: Dol.gov IRS and DOL Identify Fall Regulatory Guidance Priorities The IRS and the Department of Labor Employee Benefit Security Administration have identified priority regulatory topics on their fall guidance agendas. These postings are not assurance that all items listed will be completed and issued within hoped-for timeframes, but serve as a general reference to the guidance these agencies are working to complete. Source: Ascensus.com EBSA Enforcement Action Remains Brisk, Recovering Over $2.5 Billion The enforcement and benefit advisor programs of the Labor Department's Employee Benefits Security Administration do not appear to be slowing down much, with robust activity in fiscal year 2019. The enforcement program alone recovered more than $2 billion from its investigations -- up from $1.6 billion in FY 2018 -- including $1.1 billion from enforcement actions. Source: Napa-net.org Early Withdrawals From IRAs and 401k Plans Congress created incentives for certain individuals to save for retirement through Individual Retirement Accounts and 401ks. Employees (and sometimes employers in the case of 401k plans) contribute funds to a tax-advantaged account, which can then be used as an income source in retirement. To discourage account owners from withdrawing funds before retirement, the Internal Revenue Code generally imposes a 10% penalty on early withdrawals. Individuals who make early withdrawals are subject to rules that vary by plan type, the circumstance warranting a withdrawal, and plan-specific rules. This a 3-page review of those rules. Source: Crsreports.congress.gov »» Click here for more Compliance and Regulatory Material Marketplace News Amazon Taps Fidelity to Handle Its Massive 401k Plan Charles Schwab to Buy TD Ameritrade for $26 billion, Reports Say »» 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
|
