Reasons to Offer a Mix of Passive and Active Investments in DC Plans
|
Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicIn This Issue
Fiduciary and Plan Governance Reasons to Offer a Mix of Passive and Active Investments in DC Plans While some retirement plan sponsors have loaded their investment menus up with passive, low-cost funds as a result of the increasing lawsuits being brought against retirement plans, investment experts say that is a faulty approach. This article reviews why DC plans need to offer participants a choice of both active and passive investments. Source: Plansponsor.com ESG Investing in Retirement Accounts: Down But Not Out Proponents of environmental, social, and governance investing may have good news on the horizon. In particular, the good news that could resuscitate ESG investing in retirement accounts following the DOL's recent blow to the practice. Representative Andy Levin is reportedly in the process of drafting two bills that would require investment advisers to incorporate ESG investing in retirement savings accounts. Source: Mintz.com »» Click here for more Fiduciary and Plan Governance Material General Items Get Ready to Handle the 401k Enrollment Season Remotely Conducting 401k enrollment meetings is often a challenge for HR professionals, but the stakes have never been higher than they are in 2020. The coronavirus pandemic will impact both the substance and the form of these meetings. Here are eight tips to help you make your digital enrollment meetings as effective as possible. Source: Recruiter.com Insight: Studies, Research, and White Papers Exposing Excessive Fee Litigation This 24-page white paper explores the problems with the recent surge in excessive fee litigation. Plaintiff law firms have flooded the federal courts with cookie-cutter ERISA class action litigation against defined contribution plans. The copy-cat lawsuits -- now nearly 200 in number with over 90 filed in 2020 alone -- attack retirement plan investment options that are commonplace and longstanding. The paper suggests four systemic reforms needed to restore a fair and uniform fiduciary standard of care. Source: Euclidspecialty.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Big Concepts That 401k Plan Providers Forget About Whether it was working for others or working for charitable organizations, it seems that there is a culture out there that has forgotten why businesses and organizations exist. "It's amazing what people will forget and it's amazing what plan providers forget in dealing with their business, with their clients, and other plan providers." Source: Jdsupra.com CARES Act Changes to Retirement Plans As the COVID-19 pandemic arrived, Congress passed the CARES Act to quickly provide relief, including to allow cash from retirement plans to flow into the hands of individuals and families. This piece discusses the 2020 changes to retirement plan distributions and loans made by the CARES Act, as well as tips to make the most tax-efficient advantage of those changes. Source: Thetaxadviser.com 403b Plans Impact of COVID-19 and Economic Conditions on 403b Plans PSCA conducted a brief survey of 403b plan sponsors in October 2020 to determine how they are responding to the COVID-19 pandemic and economic conditions. This is the full 10-page report. Source: Psca.org Spousal, Annuity Rights for 403b Distributions The IRS has issued Notice 2020-80, which requests comments on spousal and annuity rights that may potentially apply to 403b custodial accounts that are distributed to participants in-kind upon the termination of a 403b plan. Source: Futureplan.com »» Click here for More 403b Material Court and Legal Class Certified in Suit Over TIAA's Plan Loan Practices A U.S. District has granted class certification in a lawsuit seeking to recover money that TIAA allegedly "unlawfully took" from retirement accounts similarly situated in the Washington University Retirement Savings Plan and across its U.S. business. The judge noted there are more than 460,000 loans at issue. Source: Planadviser.com Coca-Cola Bottler Faces ERISA Fiduciary Breach Complaint A bottler working for the famous soft drink company Coca-Cola is facing an ERISA fiduciary breach lawsuit filed in the U.S. District Court for the Western District of North Carolina. It's anyone's guess at this early juncture whether the fiduciary breach lawsuit will fizzle, though it includes some familiar allegations from other lawsuits filed by Capozzi Adler. Source: Planadviser.com Freedom Funds Focus of Another Excessive Fee Suit Another 401k plan fiduciary was sued for excessive fees and an allegedly imprudent selection of target-date funds. The plaintiffs, former employees of independent bottler Coca-Cola Consolidated Inc. and current participants in the Coca-Cola Consolidated, Inc. 401k plan, charged that the defendants breached their fiduciary duties to the plan. Source: Napa-net.org Judge Rebuffs 401k Excessive Fee Settlement A proposed excessive fee suit settlement has been rejected by the court. The settlement in question was for $2.55 million, and it involves allegations regarding the $1.9 billion 401k plan of Teva Pharmaceuticals USA Inc. While there wasn't anything particularly unusual about the suit or its allegations, Judge Kearney had an issue regarding "distributional fairness" in how the current plan of allocation outlined the process of notification. Source: Napa-net.org Complaint Accuses Cognizant of Breach of 401k Fiduciary Duties In the District of New Jersey, plaintiffs who participated in the Cognizant Technology Solutions 401k Savings Plan filed a putative class-action complaint against digital solutions company Cognizant, its Board, and the 401k investment committee. The defendants allegedly violated ERISA by breaching their fiduciary duties. Source: Lawstreetmedia.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory The Basics of Terminating a DC Plan It's possible that more retirement plans could be terminated this year as a result of the economic impact of COVID-19 and business closures. But there are many details to attend to when terminating a defined contribution plan, from updating the plan with statutory amendments to filing the final Form 5500. Source: Plansponsor.com 2020 Required Amendments Have Little Impact on 401k Plans The IRS released Notice 2020-83. But the news this year for many 401k plans is "no news," as there is only one change required this time around. And that single change affects only 401k plans that are affected by a new law provision that counts "difficulty of care payments" as "compensation" for purposes of annual additions. Source: Compliancedashboard.net Who Is a Long-Term, Part-Time Employee? 401k Plans Will Need to Know Historically, 401k plans could exclude individuals who worked less than 1,000 hours in the plan year. However, the SECURE Act, in its effort to expand access to employer retirement plans, introduced the concept of a "long-term, part-time employee." Starting in 2021, plans will need to consider these employees for eligibility, vesting, and company contribution purposes. Source: Shrm.org December 31 Sunset of Safe Harbor Correction Method A special IRS-approved correction method available for elective deferral failures in 401k and 403b plans with automatic contribution features will sunset on December 31, 2020, meaning it will not be available to correct elective deferral failures that begin after that date. The loss of this favorable correction method going forward serves as a good reminder to plan sponsors to confirm that their plans, in operation, are correctly implementing employee elective deferrals. Source: Jdsupra.com »» Click here for more Compliance and Regulatory Material Marketplace News ShareBuilder 401k Announces Fee Wavier Program
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 on any website. 401khelpcenter.com, LLC
|
