How Will Your Plan Fare in an Audit or Lawsuit?
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Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicIn This Issue
Fiduciary and Plan Governance Back to the Basics: How Will Your Plan Fare in an Audit or Lawsuit? This is the time of year when we see lots of articles on hot plan trends for 2021 and what benefits innovations plan sponsors are adopting. But the beginning of the new year is also a good time for fiduciaries to review basic plan policies and operations to see how they can be improved. The better these are, the greater the chances your plan will survive an audit or prevail in a fiduciary breach lawsuit. Here are some places to start. Source: Cohenbuckmann.com Plan Fiduciaries: You Have No Right to Vote The final regulations set out the basic premise that a plan fiduciary charged with the responsibility to manage plan assets that include shares of stock also has the responsibility to manage shareholder rights appurtenant to those shares, such as the right to vote proxies. The applicable fiduciary must exercise such authority under the loyalty and prudence standards prescribed under ERISA. Note, however, this responsibility will not apply to an individual account plan, such as a 401k plan, that provides for pass-through voting to participants and beneficiaries. Source: Winstead.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Another Record Year for Retirement Savings PSCA's 63rd Annual Survey found record contribution and participation rates for the third year in a row. More employees had account balances in and contributed to, their plans than ever before, and employers contributed an average of 5.3% of gross annual pay to participants, the highest recorded to date. Plan participants contributed an average of 7.6% of pay in 2019, combined with the 5.3% of companies are pitching in gives an average savings rate of 12.9 percent in 2019. Source: Psca.org The Pandemic's Impact on Workers' Finances Has Long-Term Repercussions for Retirement Security One in five U.S. workers (21 percent) indicate their confidence in their ability to retire comfortably has declined in light of the coronavirus pandemic and only 27 percent are very confident that they will be able to fully retire with a comfortable lifestyle, according to a new survey released by nonprofit Transamerica Center for Retirement Studies. Source: Transamericacenter.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers A Few Important Points About the DOL's Fiduciary Actions The DOL has confirmed that a financial professional cannot simply write their way out of a functional fiduciary relationship. This point relates to the "mutual understanding" prong of the five-part test which stipulates that two parties' "reasonable understandings of their relationship" are critical to determining whether they have arrived at a mutual agreement, arrangement, or understanding that the investment advice will serve as a primary basis for investment decisions. Under the new framework, written statements disclaiming a mutual understanding or forbidding reliance on the advice as a primary basis for investment decisions are not determinative. Source: Planadviser.com 401k Recordkeepers Bullish on Post-COVID Opportunities Of the various segments of the defined-contribution industry, record keepers are the most mature, consolidated, and powerful. Advisers are closer to the clients, but record keepers own the data and provide the platform to reach them. Leaders of the top record keepers attending the RPA Convergence Roundtable and Think Tank on Dec. 14 and 15 shared what is on their minds in the current environment. Source: Investmentnews.com (registration may be required) DOL Interprets Five-Part Investment Advice Test and Issues Final Advice PTE The DOL issued its highly anticipated final prohibited transaction class exemption for fiduciary investment advice. This article provides an overview of the final exemption. It begins with the DOL's interpretation of the five-part test, including its application to rollover advice. Then it summarizes the actual exemption and describes its coverage and conditions. Source: Groom.com Court and Legal Is the Tide of ERISA Litigation Turning? One ERISA attorney who tends to represent plaintiffs says the future might hold fewer cases, thanks to certain key Supreme Court rulings and broad improvements in plan design and governance. Source: Planadviser.com Supreme Court Ruling Addresses ERISA Preemption A recent decision filed by the U.S. Supreme Court has significant implications in the area of ERISA preemption of state laws and regulations, though the direct impact on retirement plans could be muted. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Bill to Expand MEPs to 403bs Introduced in Senate A bipartisan trio of U.S. Senators has introduced legislation that would expand Multiple Employer Plan access to 403b plans, along with other MEP enhancements. Source: Asppa.org Coronavirus Relief Bill Includes Retirement Plan Relief The $900 billion coronavirus relief package, which is expected to be approved by President Trump in the coming days, includes some good news for retirement plan sponsors. The massive 5,600-page bill includes a "temporary rule preventing partial plan terminations" for plan sponsors of defined contribution retirement plans. This provision allows defined contribution retirement plan sponsors to avoid requirements that are attached to partial plan termination rules, the biggest of which includes terminated participants to become 100% vested in plan benefits. Source: Schneiderdowns.com »» Click here for more on Legislative and Washington Actions State-Based Private-Sector Retirement Programs California and Oregon State-Sponsored Retirement Plans State-sponsored retirement plans for private-sector workers generally require certain employers without their own retirement plans to make the state-sponsored plan available to their employees. Each state has different rules so it is imperative to confer with state authorities and reference state websites for guidance. Some of the states' plans have an employer registration requirement that is time-sensitive. California and Oregon are examples of two such states. Source: Retirementlc.com Compliance and Regulatory Retirement Plan Reminders for a New Year Whenever the calendar turns to a new year, certain opportunities and obligations end and new ones arise. This compliance insight focuses on the end of various CARES Act retirement plan provisions, deadline extensions that do or do not continue into 2021, and changes coming in the new year. Source: Segalco.com The IRS Released the Final Regulations for Plan Loan Offset Rollovers The IRS released final regulations on the provisions of the Tax Cuts and Jobs Act that added Section 402(c)(3) of the Internal Revenue Code special rollover relief for qualified plan loan offset amounts. Source: Benefitslawadvisor.com Missing Participants: What Are You Missing? Missing participants are a problem: for employers, for plans, for beneficiaries, and even for the participants themselves. A November 11, 2020, session of ASPPA All Access offered a look at the challenge missing participants pose, and what can -- and must -- be done to meet it. Source: Asppa.org IRS Extends Relief on Remote Notarization In response to the continuing public health emergency caused by the COVID-19 pandemic, the Internal Revenue Service has extended remote notarization relief issued in June. Specifically, Notice 2021-03 extends from Jan. 1, 2021, through June 30, 2021, the temporary relief provided in Notice 2020-42, 2020-26 I.R.B. 986, from the physical presence requirement for participant elections to be witnessed by a plan representative or a notary public. Source: Asppa.org »» Click here for more Compliance and Regulatory Material Marketplace News EBRI Names New Individuals to Board of Trustee
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