Who Owns a 401k Participant's Personal Information?
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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
Fiduciary and Plan Governance Who Owns a 401k Participant's Personal Information? Service providers for 401k and other retirement plans require access to personal data on participants including name, age, address, date of hire, compensation and possibly social security number to provide recordkeeping services. Are these plan service providers simply taking advantage of a business opportunity or are they improperly exploiting information that is a plan asset that plan fiduciaries must protect? Source: Retirementplanblog.com Court Provides Guidance on Monitoring ERISA Investment Fiduciaries The U.S. District Court for the Western District of Pennsylvania in Scalia v. WPN Corporation wrote regarding the duty to monitor investment fiduciaries. Given the potential risk related to a breach of this fiduciary duty, the WPN opinion is likely to be an important one for Appointing Fiduciaries. In its opinion, the WPN court provided guidance for assessing the extent to which an Appointing Fiduciary has a duty to monitor and, if so, for determining whether the Appointing Fiduciary has fulfilled that duty. Source: Financialservicesemploymentlaw.com Should a Plan Sponsor Adopt a 401k Investment Policy Statement? While it is by no means a universal truth, it is now commonly believed most 401k plan sponsors are better served by adopting an IPS. The law does not require it, but it is a best practice not only for the plan but for the investment adviser as well because it lays out in writing a guideline for investment objectives and limitations for both. Source: Fiduciarynews.com Can Your Plan Records Be Hacked? Plan Fiduciaries Need to Focus on Cybersecurity Imagine you have a plan participant who suddenly finds that $99,000 has been stolen from her account by a hacker. Her only notice was confirmations she received after the money had been stolen. Now imagine that you are that participant. These are the facts of an actual lawsuit recently filed by a plan participant who was a victim of cyber theft. The plan fiduciaries and recordkeeper refused to reimburse her losses, and her retirement account literally disappeared. Is anyone legally responsible to make up this kind of loss? If you are a plan sponsor or other plan service provider whose systems permitted this breach, you may well be, and you need to pay attention to maintaining and improving your system's security. Source: Penchecks.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Missing Voices: What 401k Borrowers Can Add to the Loan Conversation How do participants feel about loans, how are they using them, and how are participants affected by plan sponsor decisions related to the loan feature? Addressing the "voice of the participant" -- and what we can learn from these voices -- is the purpose of this 16-page report. Source: Loaneraser.com Most 401ks Embrace New Hardship Rules, But Participant Response Muted Employers that sponsor 401k plans have moved quickly to incorporate new, more liberal, hardship withdrawal provisions, but most have not yet seen an uptick in participants taking advantage of the new rules, according to a new snapshot survey by the Plan Sponsor Council of America. Source: Psca.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Why Retirement Plan Advisers Should Act as 3(38) Investment Fiduciaries A year ago, we reviewed 3(21) versus 3(38) ERISA investment fiduciaries and asked which was better. Now it seems clear that 3(38) is better, at least for advisers, and that rather than charge more or the same for acting as a 3(21) fiduciary, advisers should charge less. Here's why. Source: Investmentnews.com (registration may be required) Plan Communications Beware of the "Overshare": Construe Requests for ERISA Plan Documents Narrowly Administrators of ERISA plans frequently receive requests from participants, beneficiaries, and their representatives for plan-related documents. A recent decision from the Court of Appeals for the Fifth Circuit supports providing only those documents that fall under a narrow reading of ERISA Section 104(b)(4). Over-production could serve to facilitate litigation. Source: Beneficiallyyours.com Default Electronic Delivery Works, White Paper Building on research conducted in 2015, this 50-page white paper updates the previous estimate of participant cost savings and further explores the other benefits of electronic communication for plan participants based on current empirical evidence of internet access and technology adoption. In addition, the current research is enhanced by provider's experience with electronic delivery to demonstrate the many benefits realized by plan participants from electronic communication. Source: Sparkinstitute.org »» Click here for more on Plan Education and Communications Court and Legal Mandatory Individual Arbitration Clauses in 401k Plans, a Good Idea? The dispute resolution landscape for ERISA fiduciary breach claims may be shifting. The Ninth Circuit's decision in Dorman v. Charles Schwab Corp. upheld a provision in Charles Schwab's 401k plan mandating individual arbitration and waiving class actions, for certain types of fiduciary breach claims. Should employers add a similar mandatory individual arbitration clause to their own plans? The answer requires a careful balancing of potential pros and cons of mandatory individual arbitration clauses. Source: Troutman.com Justices Wary of Intel Committee Position in 401k Dispute A majority of justices on the Supreme Court seem to think posting 401k plan documents online isn't enough for companies to shorten the amount of time participants have to sue plan managers for mishandling investments. The case, which stems from a dispute over hedge fund and private equity investments in Intel Corp.'s 401k plan, has the potential to set a standard for determining how long employees have to file a lawsuit under ERISA. Source: Bloomberglaw.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity Update: Act on Multiple Fronts Cybercrime, and cybersecurity, obviously are a concern for plans. But that means more than making sure plan records and accounts are not targets and victims, it also includes other functions, structures, and systems. Experts at the recent SPARK Forum offered insights and tips on heading off cybercrime and protecting the integrity of processes and systems. Source: Ntsa-net.org »» Click here for more on Cybersecurity Issues Compliance and Regulatory Short Plan Years: What They Are and What They Mean What is a short plan year? Defining a short plan year is very easy: any plan year with fewer than 12 months. Company-sponsored retirement plans are generally required to operate on a 12-month plan year. From time-to-time, however, there are circumstances that cause a given year to be truncated. And those circumstances are really the key issue. Source: Asppa.org What is a Suspense Account and Can We Use Our Forfeiture Account Instead Can we just move the overfunded amounts to the forfeiture account, or is there a requirement that we create a separate suspense account? The short answer is that you can use the forfeiture account, but this is one of those "just because you can doesn't mean you should" situations. Source: Dwc401k.com 2019 Plan Year: Year-End Compliance Reminders Every year, plan sponsors must make sure their plans meet certain compliance requirements, including those listed here. This publication identifies the materials you need to review and will help you prepare for the year-end. This information applies to qualified defined contribution plans and 403b plans that are subject to Title I of ERISA. Source: Retirepru.com IRS Releases 2019 List of Required Amendments for Qualified Retirement Plans, Including 401k Plans The IRS released Notice 2019-64, its annual list of required amendments for individually designed qualified retirement plans, including 401k plans. Demonstrating how little has been happening in the 401k world recently, this year the RA List includes only one qualification change applicable to 401k plans. Amendments required to be made in response to the final regulations that were issued on September 23, 2019, regarding hardship distributions. Source: Compliancedashboard.net »» Click here for more Compliance and Regulatory Material
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