Pooled Employer Plans: Where Do We Stand?
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Click Here for Our Resource Page on Retirement Plans and the Coronavirus Pandemic2020 SPARK Forum - Our Flagship Conference Has Gone Digital We're offering complimentary registration, during these unprecedented times, for professionals throughout the retirement industry. Information and registration. In This Issue
Multiple Employer Plans (MEP) Pooled Employer Plans: Where Do We Stand? The IRS and DOL have not issued much-needed comprehensive guidance on PEPs. With such a short time before the rules become effective, practitioners are worried that we may not have timely guidance to make decisions regarding the addition of PEP services to their businesses. This is a two-page overview of what we currently know. Source: Asc-net.com »» Click here for more on Multiple Employer Plans Fiduciary and Plan Governance The Buck Stops With Retirement Plan Sponsors Plan sponsors can blame the problems of their plans on others, but ultimately they bear the brunt of liability as plan fiduciaries. A plan sponsor must be aware of all their fiduciary duties or at least, hiring several plan providers that do. Liability is avoided by understanding the responsibility as a retirement plan sponsor. Like with the sign on Harry Truman's desk, "The Buck Stops Here" with retirement plan sponsors. Source: Jdsupra.com Investment Policy Statement Must Stop Short of Promises An Investment Policy statement can do more harm than good if it moves from policy to guaranteed results. The policy can become more of a liability than a benefit if it steps over this line. Should you even have an Investment Policy Statement for your retirement plan? Yes. Should you throw everything in and include the proverbial kitchen sink? Absolutely not. Source: 401ktv.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers CARES Act: How Are Plan Sponsors and Participants Reacting Despite widespread anxiety in the first few months of the COVID-19 pandemic, most 401k plan sponsors and participants are staying the course, according to new data. Data from Principal shows that as of Aug. 31, only 3.2% of participants with a coronavirus-related distribution available have taken one for the period March-August 2020. The average amount taken for a coronavirus withdrawal is $16,500. Source: Napa-net.org Combined 401k Plan and IRA Balances by Age and Time Owning both a 401k plan and an individual retirement account leads to larger balances, but missed opportunities to contribute and leakage reduce those balances. One-page report. Source: Ebri.org COVID-19 401k Loans End With a Fizzle The expanded 401k loan provisions under the CARES Act have come and gone and few people have likely noticed. The increased loan-size provision was part of a package to provide financial relief to people who have been affected by COVID-19. But very few have taken out loans, especially in the expanded amount allowed by the CARES Act, according to several 401k recordkeepers that track the data. Source: Investmentnews.com (registration may be required) »» Click here for More Studies, Research, and White Papers Court and Legal Avoiding ERISA Lawsuits Isn't Hard Proposed class-action lawsuits by retirement plan participants against their employers are on track for a fivefold increase between last year and this year, according to a Bloomberg Law analysis. Sixty-five class-action suits have been filed so far in 2020 and many of these suits are for excessive fees and/or the use of overpriced share classes. Often the reason for these lawsuits is simple neglect. Here are a few simple actions that can improve fiduciary processes and reduce litigation risk. Source: Nwpsbenefits.com AutoZone ERISA Challenge Drives Ahead The U.S. District Court for the Western District of Tennessee, Western Division, has ruled against AutoZone's motion to dismiss an ERISA lawsuit accusing the firm of a variety of fiduciary breaches. The fiduciary breach lawsuit does not name Prudential as a defendant, but it does extensively discuss Prudential's GoalMaker investment solution. Source: Plansponsor.com Fiduciaries of Mutual of Omaha 401k Plan Agree to Pay $6.7M to Settle Suit Parties in a lawsuit accusing Mutual of Omaha Insurance Co. and its subsidiary United of Omaha of self-dealing in Mutual of Omaha's 401k plan have agreed to settle. The suit alleged 401k plan fiduciaries selected numerous investment options not to benefit the plan or its participants, but because they paid fees to Mutual of Omaha or its subsidiaries. The settlement agreement calls for a cash payment of $6.7 million as compensation to a class of participants. Source: Planadviser.com The Eighth Circuit has affirmed the dismissal of two cases in which plan participants claimed that their plan's fiduciaries breached their duties of prudence and loyalty by failing to act on nonpublic information about events that later caused a substantial drop in the value of their employer's stock. In each case, the participants argued that they met the pleading standard established in the Supreme Court's Dudenhoeffer decision. Source: Thomsonreuters.com Latest Excessive Fee Suit Strikes Utility Chord You might think there couldn't be another multibillion-dollar 401k plan to be sued and yet there is. The 25-page suit presents a relatively succinct case regarding its claims that the Duke plan defendants breached their fiduciary duties of loyalty and prudence, and that Duke energy failed to monitor the actions of the plan fiduciaries. Source: Napa-net.org MGM Resorts Hit With 401k Plan Excessive Fee Suit MGM Resorts International has been sued by participants of its 401k plan alleging breaches of ERISA fiduciary duties by allowing excessive recordkeeping and investment fees. The allegations are similar to many other pieces of litigation challenging the use of actively managed funds over passive funds and the use of higher-cost share classes. Source: Plansponsor.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity for Retirement Plans The monetary assets of the participant accounts are plan assets, and a plan fiduciary must exercise prudence to protect them from theft, including theft through a cyber breach. Plan sponsors have a fiduciary duty to ensure that their recordkeepers are providing appropriate security measures for protecting plan assets from unauthorized activity. If an employee's personal information has been compromised, or her identity stolen, her retirement accounts are at risk. Source: Employeebenefitslawblog.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory DOL Publishes New SECURE Act Guidance Regarding Lifetime Income Disclosures The DOL has announced new guidance, in the form of an interim final rule, implementing the lifetime income disclosure requirement for DC plans that was added to ERISA by the 2019 SECURE Act. Source: Insidecompensation.com DOL Guidance on Lifetime Income Illustrations: Coloring Within the Lines The lifetime income stream illustration required by SECURE Act Section 203 must provide the monthly amounts that both a single-life annuity and a qualified joint and survivor annuity would pay based upon the participant or beneficiary's account and subject to certain assumptions. Because providing this type of inexact illustration is inherently risky, Section 203, in turn, provides a “safe harbor” from liability to plan sponsors or fiduciaries who comply with the requirements of the lifetime income disclosure and use the model language that the DOL is required to develop. Section 203 required the DOL to issue guidance on the assumptions that should be used in the lifetime income illustrations and to provide a model disclosure within a year. The Interim Rule represents the DOL's satisfaction of this requirement. Source: Frostbrowntodd.com DOL Expands Electronic Delivery Rules for Retirement Plans The DOL finalized a new safe harbor rule for the use of electronic media to furnish information to participants and beneficiaries of employee retirement plans subject to ERISA. The new safe harbor is a welcome change for retirement plan sponsors and administrators because it broadens the availability of electronic notices, thereby reducing the costs associated with furnishing hard-copy notices. Source: Akerman.com »» Click here for more Compliance and Regulatory Material
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