DOL Unveils New Fiduciary Rule Proposal
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Fiduciary Rule DOL Unveils New Fiduciary Rule Proposal The DOL has finally unveiled its much anticipated fiduciary rule, though it's a mixed bag and has a certain "back to the future" feel, along with some new implications for recordkeepers, Pooled Employer Plans, and rollover advice. Titled "Improving Investment Advice for Workers & Retirees," the proposal -- and it's just that at this point -- proposes a new prohibited transaction class exemption that would be available for investment advice fiduciaries. Source: Asppa.org DOL Proposes New Standard to Replace Vacated Fiduciary Rule The DOL is proposing a new regulation to govern investment advice in retirement accounts to replace a rule that was vacated more than two years ago by a federal appeals court. The proposed regulation would provide exemptions under federal retirement law that would allow fiduciaries to receive compensation for advice that would otherwise be prohibited, such as third party payments, as long as they act in a retirement savers' best interests. Source: Investmentnews.com (registration may be required) DOL Proposes a New Fiduciary Investment Advice Exemption The DOL proposed a new exemption from the prohibited transaction provisions of ERISA in connection with the provision of investment advice. The proposed exemption is the DOL's response to the vacatur of its prior fiduciary rule and reflects its desire to harmonize its approach with that of the Securities and Exchange Commission. Source: Groom.com DOL Proposes Exemption, New Compensation for Fiduciaries The DOL has proposed an exemption allowing investment professionals acting in their clients' best interest to receive compensation for advice that would otherwise be prohibited, such as rollover recommendations. Under ERISA, investment fiduciaries are generally prohibited from receiving compensation for transactions involving employee benefit plans and IRAs, according to the proposal. But the proposal released on Monday would change that. Source: Ai-cio.com DOL Reinstates Five-Part Fiduciary Status Test and Proposes Class Exemption The proposed exemption would create a pathway allowing investment advice fiduciaries under ERISA and the Internal Revenue Code to (i) receive compensation, including that which derives from rendering advice to roll over assets from employee benefit plans to IRAs, and (ii) engage in certain principal transactions that would otherwise violate the prohibited transaction provisions of ERISA and the Code. The proposed exemption would apply to registered investment advisers, broker-dealers, banks, insurance companies, and their employees, agents, and representatives who are investment advice fiduciaries. Source: Wagnerlawgroup.com The DOL has issued a technical amendment formally reinstating its pre-2016 regulation defining investment advice and has proposed a new prohibited transaction exemption for financial institutions and investment professionals who are investment advice fiduciaries. These actions close the book on the DOL's 2016 fiduciary rule and its related PTEs and exemption amendments, which were vacated by the Fifth Circuit in 2018. Source: Thomsonreuters.com »» Click here for more on the DOL's Fiduciary Rule Fiduciary and Plan Governance Can You Invest Your Retirement Plan to Save the Planet? The DOL issued a proposed regulation amending the fiduciary regulations governing investment duties under ERISA. This proposed regulation guides an ERISA fiduciary considering an investment or investment strategy based on "non-pecuniary" factors such as environmental, social or corporate governance, or sustainability factors. The DOL indicated that its proposal is in response to increasing interest in ESG and sustainability investing and no clear standard for what constitutes an ESG investment. Source: Beneficiallyyours.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Canadians Reducing Retirement Savings Due To Coronavirus More than a third (40%) of pre-retirees have a negative outlook on their life in retirement, the highest rates of negative retirement perception among survey respondents since 2014, according to the latest annual survey by Fidelity Investments Canada. The same percentage said their salary or earnings have decreased due to the coronavirus pandemic. Among those negatively impacted, 50% are reducing the amount of money they’re able to save and the amount they’re able to invest, compared to last year. Source: Benefitscanada.com Report Featuring Latest Trends in 401k Participant Behavior and Plan Design T. Rowe Price Retirement Plan Services has released its annual benchmarking report featuring data and analysis related to 401k participant behavior and plan design, based on the firm's full-service recordkeeping client data for 2019. While 2020 could influence or even reverse some of the retirement plan trends identified in the 2019 report, the company summarized the following findings related to participant behavior and plan design. Source: Prnewswire.com Cogent Syndicated Unveils Leaders in DC Plan Sponsor Client Satisfaction 401k plan sponsors are adjusting to massive changes in staffing and assisting remaining employees with short-term financial stress in the wake of the COVID-19 pandemic. All this on top of their traditional goals of ensuring retirement readiness and regulatory compliance. As plan sponsors rely even more heavily on their plan providers, service and support become the most influential driver of satisfaction and loyalty in the DC plan market. These and other findings are from Retirement Planscape, an annual Cogent Syndicated study from Escalent, a top human behavior and analytics firm. Source: Businesswire.com »» Click here for More Studies, Research, and White Papers Court and Legal Fifth Circuit Upholds Dismissal in Single Stock Fund 401k Case The Fifth Circuit in Schweitzer v. Inv. Comm. of Phillips 66 Sav. Plan dismissed claims against 401k plan fiduciaries related to allowing plan participants to hold a single stock that was not an employer security as a plan investment alternative. As discussed here, the Court's decision offers meaningful guidance to fiduciaries of participant-directed plans and, more specifically, to those evaluating what to do with a company stock fund after a spinoff or divestiture. Source: Erisapracticecenter.com 401k Lawsuit Costs Fidelity $28.5 Million Fidelity Investments is settling a lawsuit involving its 401k plan for $28.5 million, according to court records filed Thursday. The settlement resolves a class-action case brought in 2018 that alleged the firm breached its fiduciary responsibility to plan participants by including its products on the plan menu. The company had been similarly targeted in a prior lawsuit that it settled in 2014 for $12 million. As part of that, the company agreed to rebate revenue sharing from mutual funds on the plan menu back to the plan. Source: Investmentnews.com (registration may be required) Three New ERISA Lawsuits Bash Actively Managed TDFs A participant in Costco's retirement plan filed a lawsuit claiming the fiduciaries of the plan breached their duties under ERISA by authorizing the plan to provide inappropriately expensive and underperforming active management funds. Similar allegations are echoed in three new lawsuits filed this week against Quest Diagnostics, IQVIA Holdings, and Eversource. All three suits question the use of actively managed funds provided by Fidelity, although the asset manager is not itself named as a defendant in any of the complaints. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Best Practices for Plan Sponsors to Address Cybersecurity Concerns The increased flow of electronic communications risks the potential exposure of participants' confidential and personal data to cybercriminals and, in turn, creates a new liability source for the plan and its service providers. The procedures many plan sponsors, third-party administrators, and recordkeepers currently have in place to exchange data or manage and verify participant withdrawals may no longer be prudent or feasible. Because of the urgency in dealing with this problem, the time is now for plan sponsors, plan fiduciaries, and plan service providers to address and reevaluate cybersecurity concerns, to ensure they and their participants will not fall victim to fraud, hacking or phishing schemes. Source: Wagnerlawgroup.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory IRS Offers Temporary Relief for Midyear Contribution Changes Under Safe Harbor Plans In light of the COVID-19 pandemic, the IRS has issued Notice 2020-52, offering safe harbor plan sponsors temporary relief from certain requirements applicable to midyear reductions or suspensions of safe harbor contributions. Notice 2020-52 also clarifies the requirements for midyear contribution reductions (during or after the pandemic) that affect only highly compensated employees participating in a safe harbor plan. Source: Thomsonreuters.com The Five "Ws" of a 401k Plan Audit If you've just been informed that your 401k plan needs an audit, you probably have many questions if you have never been through a 401k audit. Hopefully by answering the five "Ws" (Who? What? When? Where? Why?), this article will cover most of your questions. Source: Belfint.com »» Click here for more Compliance and Regulatory Material Marketplace News Empower Retirement to Acquire Personal Capital
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