Matrix Trust Accused of Being Deceptive About Fees
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Court and Legal Matrix Trust Accused of Being Deceptive About Fees Matrix Trust Co. is facing a 401k class-action lawsuit from a Minnesota engineering firm that alleges the company took millions of dollars from retirement plan accounts. MBA Engineering alleges Matrix Trust Co., a subsidiary of Broadridge Financial Solutions, unlawfully retained potentially hundreds of millions of dollars in 12b-1 fees, non-float cash interest, and float cash interest from more than 60,0000 customers through nondisclosure and concealment. Source: Planadviser.com Stock Drop Litigation Is on the Rise: Will Your Retirement Plan Be a Target? Stock price plunges caused by COVID and current market conditions create fertile ground for stockholder litigation, including claims by participants in retirement plans funded with employer securities that fiduciaries should have eliminated company stock investments to protect against declining values. These claims present a dilemma for plan fiduciaries who owe certain fiduciary duties to the plan and its participants but must also grapple with intricate securities laws governing company stock. One important aspect of defending these cases involves understanding the interplay between securities laws and fiduciary obligations under ERISA. Source: Velaw.com Alleged Boeing Retirement Plan Fraudster Charged in California A federal grand jury has indicted an Orange County man on charges that he fraudulently obtained access to Boeing employees' retirement accounts. The grand jury heard sufficient evidence to charge Hao Vo, who is 30, for the theft of hundreds of thousands of dollars from Boeing employees' accounts. Vo is charged with three counts of bank fraud and one count of aggravated identity theft. Source: Plansponsor.com Sutter Health 403b Plan the Target of Excessive Fee Suit A lawsuit has been filed against fiduciaries of the Sutter Health 403b Savings Plan for breaches of their fiduciary duties under ERISA. Defendants are accused of failing to leverage the size of the plan to negotiate for lower investment and recordkeeping fees, among other things. Source: Planadviser.com »» Click here for more Court and Other Legal Issues General Items Bloomberg Op-ed Gets Fast Rebuke From 401k Defenders A Bloomberg opinion piece this week that was critical of the 401k system has prompted a big response from the financial advice world. On July 21, a column by former AQR head of financial markets research Aaron Brown called out 401ks for no longer having much benefit for savers, largely due to tax changes and fees charged by investment and service providers. That assessment is faulty, 401k proponents responded, raising issues with the facts and assumptions cited in the opinion piece. Source: Investmentnews.com (registration may be required) Fiduciary and Plan Governance Retirement Plan Fiduciary Considerations in Context of COVID-19 Retirement plan fiduciaries are undoubtedly concerned about the effect of all the changes brought about by the pandemic and its effect on society and the stock market. Conducting a comprehensive review of a plan's investments, fees, and performance is in order to avoid litigation. Here are some considerations for fiduciaries navigating their duties in the wake of COVID-19. Source: Hallbenefitslaw.com DOL Guidance on ESG Investing by Retirement Plans: Investment Committees Should Handle With Care Retirement plan investment fiduciaries would be well-advised to note the increasing level of scrutiny the DOL is applying to ESG funds in retirement plans. Selecting or retaining ESG funds can be fraught with increased audit risk, including, potentially, imposing penalties for breach of fiduciary duty under ERISA. 401k and other defined contribution plans are at enhanced risk. Source: Benefitslawadvisor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Assessing the Effects of the CARES Act on 401k Savings The CARES Act gives retirement savers added flexibility to access their 401k savings. And while this flexibility is helpful to many workers, it's encouraging that the vast majority have not needed to access their retirement savings and are staying the course on their journey to retirement. Less than 2% of participants had withdrawn assets via coronavirus-related distributions as of May 31, according to How America Saves 2020: The CARES Act. The decision to avoid tapping into retirement savings is consistent with other participant data. Source: Vanguard.com Hardship Withdrawals Not Widespread, Studies Say The economic strains occasioned by the pandemic have had wide-ranging effects, and one of the actions put in place is to ease the rules concerning hardship withdrawals and loans. But availability has not made them a widespread response to economic challenges, recent studies have found. Loan and hardship distribution usage were relatively low in 2019, says T. Rowe Price in its Reference Point Annual Benchmarking Report. They report that while hardship distributions did grow in 2019, they only did so by 1.5%. They attribute the low levels to improved market conditions. Source: Asppa.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers 401k Plans: Gold Mines or Land Mines? Crises like the COVID-19 pandemic seem to accelerate trends already in motion, as well as creating new ones. While an estimated 50% of defined-contribution plans like 401ks are managed by more than 100,000 wealth managers who do not specialize in DC plans and earn less than 50% of their revenue from such plans, it's getting harder for them to dabble in an industry littered with regulatory and legal land mines. Source: Investmentnews.com (registration may be required) Legislative and Washington DC New COVID 401k Catch-Up Bill Introduced A quartet of GOP senators have introduced new legislation that would allow individuals facing financial challenges who are unable to make contributions to their tax-advantaged retirement accounts in 2020 to make catch-up contributions to these accounts in the coming years. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Preventing Cyber Theft of Plan Assets Before It Is Too Late In the employee benefit plan landscape, cyber theft of participant accounts is a disaster waiting to happen. Whether or not you are liable as a plan sponsor, is a situation you do not want to be in. Fortunately, there are steps plan sponsors can take to safeguard participant accounts from cyber theft. Source: Orba.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory The Value of a Good Retirement Plan Auditing Firm In the world of retirement plans, larger retirement plans have to answer a higher authority through the independent audit requirement. The purpose of this article is to let you know about the plan audit requirement and what to look for in hiring an independent auditor for your retirement plan. Source: Jdsupra.com Reporting Coronavirus-Related Distributions and Repayments Employee benefits law has changed significantly, even if temporarily, under the CARES Act. Employees may now take a coronavirus-related distribution from a defined contribution retirement plan. The IRS has yet to provide official reporting guidance, but it is anticipated that the reporting process for CRDs will be similar to those already in place for Qualified Disaster Distributions as outlined in IRS Publication 976, Disaster Relief. Source: Hallbenefitslaw.com Required Distributions for 2020 Suspended for Many Plan Participants The CARES Act creates a moratorium on required minimum distributions for 2020. The one-year required minimum distribution moratorium under the CARES Act applies to IRAs and defined contribution retirement plans, such as 401ks, money purchase pension plans, 403b plans and some government plans. Plans may need to be amended to accommodate the moratorium. Source: Mcdonaldhopkins.com E-Delivery Paper Notices Can Be Deferred Under COVID-19 Relief A key Department of Labor official confirmed that the DOL's deadline relief provided in response to the Coronavirus pandemic also applies to initial paper notices under the DOL's new electronic disclosure regulations. Source: Asppa.org »» Click here for more Compliance and Regulatory Material Marketplace News New Qualified 401k Consultant Credential Announced
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