Revamped DOL Fiduciary Rule Undergoing OMB Review
|
Newsletter Sponsor It's Here! The 401k Averages Book 20th Edition The 20th Edition of the 401k Averages Book has just been released with all new 401k fee benchmarking data. Use the 401k Averages Book to better understand investment, recordkeeping and revenue sharing expenses for 401k plans. Still the most recognized source book for comparative, non-biased 401k average cost information. Click here for more information. Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicIn This Issue
Items of Special Interest to Service Providers Revamped DOL Fiduciary Rule Undergoing OMB Review If you were wondering what the DOL was planning to do about its reported revision of the fiduciary rule, wonder no more. A proposal has just been submitted to the Office of Management and Budget for review. While the text of the proposal is not yet available, the title, "Improving Invest. Advice for Workers & Retirees Exemption," suggests that it involves a prohibited transaction exemption that could potentially replace the Best Interest Contract Exemption (BICE) that was thrown out by the 5th U.S. Circuit Court of Appeals' in June 2018. Source: Ntsa-net.org New DOL Fiduciary Rule Keeps IRA Market Under the IRS, Allow Some Conflicted Advice The famous DOL fiduciary rule died in 2018 and stayed dead. Now suddenly the DOL is sending a new version to OMB for a final look. What sparked its Lazarus-like reappearance is a mystery. There's less mystery about what the document contains, though nobody has seen it. This article catches us up on two lost years for the DOL rule and removes most of the mystery cloaking the sudden change, and why it'll look much like what Wall Street wants, with a key exception. Source: Riabiz.com General Items What Plan Sponsors Should Know About the Plan Document ERISA requires all retirement plan sponsors to have a written plan document to formalize how their unique plan will operate. Operating a retirement plan without this key document can open up your business to significant liability. Why is the plan document so important, and what elements should be included in your organization's plan document? Source: Planpilot.com Small Business Retirement Plan Options - 2020 This chart compares 4 common types of plan designs often utilized by small employers. Source: Consultrms.com Fiduciary and Plan Governance DOL Guidance on Private Equity Adds Flexibility for DC Plans Department's views on the use of private equity investments within 401k and other DC plans. The Information Letter was issued to Groom Law Group on behalf of two of its clients and makes clear that 401k fiduciaries can prudently include private equity as a component of an ERISA plan's diversified investment option, such as a target-date fund. The letter provides a framework of important factors for plan fiduciaries to consider to demonstrate the prudence of such investments. Source: Groom.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Employers Cutting 401k Matching Contributions The pandemic, which has changed the way millions of people work, is also starting to change the way they save, and not in a good way. Some 12% of employers have suspended matching contributions to their 401k plans, and an additional 23% were planning to cut their match or were considering it, according to a survey conducted in late April by Willis Towers Watson. Source: Nasdaq.com »» Click here for More Studies, Research, and White Papers 403b Plans The Next Evolution in 403b Plans: Investments While 403b plans have made great strides, lifting restrictions on the types of investments the plans can offer and considering more diverse investment types could further improve participant retirement outcomes. Source: Plansponsor.com »» Click here for More 403b Material Plan Communications Participant Communications Specific to the Pandemic A recent Buck survey showed that 62% of defined contribution plan sponsors plan to increase their financial education communications. And there is certainly an increased need. Elizabeth Woodburn, with Buck, describes what elements DC plan sponsors may consider including in participant communications during the COVID-19 pandemic. Source: Plansponsor.com »» Click here for more on Plan Education and Communications Court and Legal Fifth Circuit Holds That Offering Single Stock Investments in a 401k Plan is Not Per-Se Imprudent The Fifth Circuit held that although the stock of the former parent was not statutorily exempt from ERISA's diversification because it was no longer a "qualifying employer security," there was no obligation for the plan fiduciaries to force plan participants to divest from the funds. The court explained that ERISA contains no per se prohibition on individual account plans offering single-stock funds. Source: Haynesboone.com Appeals Court Upholds Dismissal of Phillips 66 401k Stock Case A federal appeals court in New Orleans has upheld a lower court's dismissal of a complaint by participants in a Phillips 66 Co. 401k plan that fiduciaries violated their ERISA duties in managing a stock investment within the plan. "Plaintiffs claim that holding a single-stock fund is imprudent per se because of the risk inherent in holding an undiversified asset," the three-judge panel wrote on May 22. "But ERISA contains no prohibition on individual account plans' offering single-stock funds." Source: Pionline.com Sixth Circuit: Chapter 13 Debtor May Exclude 401k Plan Contributions From Disposable Income In a case of first impression, the US Court of Appeals for the Sixth Circuit held that a Chapter 13 debtor may exclude from her bankruptcy petition disposable income the post-petition 401k plan contribution dollar amount if she contributed that amount to her plan before her bankruptcy. Source: Westlaw.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security The Leventhal decision comes against the backdrop of our current economic climate that, to be sure, raises the stakes for retirement plan cybersecurity. Plan sponsors are operating in a novel environment, where more employees are working remotely than ever before, many of their participants might be furloughed or unemployed, and the CARES Act makes it more accessible and attractive for employees to withdraw from their 401k plans. The collision of these factors makes securing participant retirement accounts all the more vital. The Leventhal case highlights the importance of protecting against cybersecurity breaches amid these unusual times. Source: Wagnerlawgroup.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Tips to Prepare for Your Upcoming 401k Plan Audit Audit request lists are going out to plan sponsors for the annual audits of their 401k plans. While the receipt of these request lists can cause blood pressure to rise at the plan sponsor, there are some simple tasks the plan sponsor can perform to prepare for the annual audit of their 401k plan. Here are some tips for plan sponsors which will help to make the audit process go smoother. Source: Linkedin.com Temporary Relief Regarding Spousal Consent under Qualified Retirement Plans In response to the COVID-19 pandemic, the IRS has issued a notice providing temporary relief from the physical presence requirement for participant elections required to be witnessed by a Plan representative or a notary public. Notice 2020-42 provides relief for participant elections made from January 1, 2020, through December 31, 2020. Source: Bradley.com Expanding the Safe Harbor for (Certain) Electronic Disclosures Plan administrators have long bemoaned the narrow parameters of the DOL's current safe harbor for electronic delivery. The new rule establishes another voluntary safe harbor for retirement plan administrators who wish to furnish "Covered Documents" to "Covered Individuals" electronically as the default means of delivery. Source: Benefitslawadvisor.com IRS Allows Remote Notarization of Participant Elections for 2020 The IRS issued Notice 2020-42 to provide temporary relief for certain participant elections required to be witnessed in the "physical presence" of a plan representative or notary public, including spousal consents. The Notice is a welcomed response to the major challenges posed by the social distancing measures put in place due to the COVID-19 pandemic, and it provides plan administrators with additional flexibility to use remote notarization and similar services for all of 2020. Source: Groom.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 © 2020 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
|
