Attitudes That Get 401k Plan Sponsors in Trouble
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General Items Attitudes That Get 401k Plan Sponsors in Trouble While there are many types of plan sponsors, there are underlying human nature characteristics that really can dictate whether a sponsor will land in trouble. This article is all about the attitudes you should avoid. Source: Jdsupra.com Fiduciary and Plan Governance Retirement and Pension Plan Administration, Application of ERISA Fiduciary Duties ERISA Section 404 sets forth ERISA's general fiduciary duty provisions. Knowing when these stringent duties apply is critical. The fiduciary duties established under ERISA are routinely acknowledged as the "highest known to the law" and the consequences of noncompliance can be significant: ERISA Section 409 imposes personal liability on fiduciaries, to make good on retirement plan losses resulting from their actions or inactions, in fulfilling their duties under ERISA Section 404. This 23-page article goes into great detail on various fiduciary duty provisions and knowing when these stringent duties apply. Source: Wagnerlawgroup.com Is Personal Information of Retirement Plan Participants an ERISA Plan Asset? A little more than one year ago, a settlement (Cassell et al. v. Vanderbilt University, et al.) involving the alleged wrongful use of personal information belonging to retirement plan participants, claimed to be a "plan assets" This year, similar claims have been made against Shell Oil Company in connection with its 401k plan. Retirement plan fiduciaries may begin seeing more of these claims and they might consider some strategies to head them off. Source: Benefitslawadvisor.com Employee Benefit Plans: Internal Controls for Processes and Governance While many plan sponsors outsource most of their plan's operations, they cannot fully farm out this responsibility. Therefore, strong plan governance and the implementation of internal controls will assist in a plan's compliance with applicable laws and regulations. Preventative controls are designed to discourage errors or fraud, while detective controls are designed to identify errors or fraud after they have occurred. This article examines sample plan controls and user controls related to third-party service providers of a plan. Source: Eisneramper.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Seven Trends in 401k Participant Behavior and Plan Design How are participants behaving with all that's happening? Is plan design keeping up? T. Rowe Price did a deep dive into its recordkeeping data and surfaced with a few important points. Source: 401kspecialistmag.com »» Click here for More Studies, Research, and White Papers 403b Plans The IRS Provides Relief for Mid-Year Reductions in Employer Contributions to Safe Harbor Plans The Internal Revenue Service issued Notice 2020-52, which provides guidance and temporary relief for employers who may choose to reduce contributions during 2020 to their safe harbor 401k or 403b plan. Source: Groom.com CARES Act Expansion of In-Service Withdrawals Highlights 403b Plan Surrender Charge Disparity The CARES Act includes provisions that allow retirement plan sponsors to provide plan participants the opportunity to withdraw funds from a defined contribution retirement plan if they are facing adverse financial consequences due to the COVID-19 pandemic. Unlike other DC plans, 403b plans are administered by insurance companies. These plans typically feature annuities that require the payment of a surrender charge of up to 12% on asset withdrawals or transfers. Plan participants in a 403b will need to check with their plan administrator to determine if any surrender charges apply before making a withdrawal. Source: Hallbenefitslaw.com »» Click here for More 403b Material Court and Legal Man Accused of Stealing Boeing IDs, Looting Retirement Plan A federal grand jury on Tuesday indicted an Orange County, California man on charges that he fraudulently obtained access to Boeing employees' retirement accounts. The man is accused of siphoning their money by making hundreds of thousands of dollars' worth of fraudulent money transfers to himself. Source: 401kspecialistmag.com Plan Sponsor and Service Provider Submit Dueling Motions to Dismiss in Response to Data Breach Suit Further demonstrating the lack of clarity on who is liable when a plan suffers a data breach, on June 30th, Abbott Laboratories and Alight Solutions pointed fingers at each other in dueling motions to dismiss a complaint that alleged both were fiduciaries in connection with a plan data breach that stole $245,000 from a participant's plan account. The Northern District of Illinois will now have to decide if, based on the complaint's allegations, either Abbott or Alight (or both) could have (i) fiduciary responsibility concerning the theft of funds from the participant's account and whether (ii) the plan participant has pled a plausible claim of fiduciary breach. Source: Wagnerlawgroup.com Supreme Court Rules "Actual Knowledge" Under ERISA "Means What It Says" In Intel Corporation Investment Policy Committee v. Sulyma, the U.S. Supreme Court unanimously sided with the plan participant, allowing his breach of fiduciary duty claims to proceed because he claimed not to have "actual knowledge" under ERISA of claims challenging the plan fiduciaries' investment decisions, despite receiving plan literature disclosing the details of those investments. If the plan participant is found to have "actual knowledge" of the fiduciary breach, he or she has three years, running from the breach or violation, to file suit. Where no "actual knowledge" is found, however, a longer six-year statute of limitations applies. Source: Icemiller.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Risk for Cyberattacks Heightened as Remote Work Continues The widespread move to remote work in light of the COVID-19 pandemic means plan sponsors should take a careful look at their cybersecurity measures. To drive the urgency home, lawsuits alleging cyberfraud negligence have been on the rise. MandMarblestone Group, Nationwide, Abbott Laboratories, Alight Solutions, and Estee Lauder have all faced litigation in the past year. Source: Plansponsor.com »» Click here for more on Cybersecurity Issues Fiduciary Rule Five Key Points About the DOL's New Fiduciary Rule The proposed exemption is intended to help workers and retirees by preserving the wide availability of investment advice arrangements and products for retirement investors. The proposed exemption is expected to be well-received by "investment advice fiduciaries," because it is broader and more flexible than the DOL's pre-existing prohibited transaction class exemptions which generally provide relief for more discrete transactions. Here are five things you should know about the proposed exemption. Source: Troutman.com DOL's New Fiduciary Investment Advice Package Presents Significant Compliance Risk Investment advisers, broker-dealers, banks, insurance companies, and other financial services firms, which interface with ERISA-covered plans and IRAs, should especially take note. The provision of "investment advice" to ERISA-covered plans and IRAs triggers a need to comply with stringent fiduciary duties and a complex web of prohibited transaction rules (depending on the nature of the advice recipient). Source: Fiduciarygovernanceblog.com Department of Labor Proposes New Guidance for Fiduciaries The new regulation and the proposed exemption are intended to replace the so-called "fiduciary rule" that was issued by the DOL in 2016, which was vacated by the Fifth Circuit Court of Appeals in 2018. Here some key takeaways. Source: Paulhastings.com »» Click here for more on the DOL's Fiduciary Rule Compliance and Regulatory Get Beneficiary Designation and Missing Participant Practices in Order COVID-19 has led to employee layoffs, employee health issues, and changed rules for required minimum distributions, all of which make it increasingly important for plan sponsors to have good procedures in place for maintaining updated beneficiary designations and finding missing participants. Source: Plansponsor.com IRS Provides COVID-19-Related Relief to Safe Harbor 401k Plans The IRS released additional guidance to help employers cope with the financial strain of the COVID-19 pandemic. This time, in Notice 2020-52, the IRS has clarified, and in some cases temporarily relaxed, rules governing when an employer with a safe harbor 401k plan can stop making safe harbor contributions without disqualifying the plan. Source: Clarkhill.com »» Click here for more Compliance and Regulatory Material
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