Best Practices for ERISA Plan Fiduciary Governance
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Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicNewsletter Sponsor 401k Averages Book 20th Edition Infographic With the release of the 401k Averages Book 20th Edition, we have updated our infographic "Are all $5,000,000 401k Plans Created Equal?" …and the findings might surprise you. The infographic compares the average costs of two $5,000,000 401k plan benchmarks. Click here to receive a copy of the infographic and see what we found out. In This Issue
Fiduciary and Plan Governance Best Practices for ERISA Plan Fiduciary Governance Plaintiffs' class action lawyers in fiduciary breach lawsuits, the DOL in ERISA plan audits, courts, and insurers have focused increased attention on how well ERISA plan fiduciaries follow procedural due process. Actions (or inactions) of committees and individual fiduciaries are scrutinized and judged in increasing detail, causing fiduciaries to wonder if they are up to date on all best practices for plan governance. This article is about best practices for ERISA plan fiduciary governance. Source: Winston.com Missing Participants: Best Practices for Pension Plans This DOL document outlines best practices that the fiduciaries of defined benefit and defined contribution plans, such as 401k plans, can follow to ensure that plan participants and beneficiaries receive promised benefits when they reach retirement age. Source: Dol.gov »» Click here for more Fiduciary and Plan Governance Material General Items When You Have to Tailor Your 401k Plan When it comes to 401k plans, most plan sponsors forget to realize that the plan should be perfectly tailored to fit their needs. And those needs change from time to time. This article is all about how you need to make sure that the 401k plan is tailored to your needs as a plan sponsor and employer. Source: Jdsupra.com Barriers to In-Plan Retirement Income Adoption Annuities have been part of successful individual retirement income strategies for a long time. But the adoption of income solutions has eluded the institutional market for decades. This is because the design of these first-generation income solutions has been fundamentally flawed, creating six barriers to adoption. Source: 401kspecialistmag.com Insight: Studies, Research, and White Papers COVID Pressured a Few Employers to Suspend Their 401k Match Data suggest that less than 1% of plan sponsors (with more than 100 participants) covering 1.6% of plan participants have suspended the match. A similar calculation for the Great Recession in 2008-2009 showed 5% of participants saw their employer’s match suspended. The conclusion seemed to be that companies were not affected by the pandemic, did not experience liquidity pressures, and saw no need to suspend the employer match. Source: Marketwatch.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers DOL's Fiduciary Interpretation and Exemption: Impact on Rollover Recommendations Since the effective date for the exemption is after the inauguration of the Biden administration, it is almost certain that the effective date will be further delayed. During that delay, we think it is likely the exemption will be revised or possibly withdrawn. But, it is just as likely that the expanded definition of fiduciary advice for rollover recommendations will be retained and possibly expanded. That could make life more difficult for broker-dealers, investment advisers, and insurance companies. While these rules will affect all of those industries, this article focuses on the impact of the likely outcomes on broker-dealers. Source: Brokerdealerlawblog.com The Emerging Patchwork of Fiduciary Investment Advice Regulation: Putting the Pieces Together Many fiduciary and best interest investment advice regulations advanced at both the federal and state levels last year. As we begin 2021, firms subject to these regulations face challenges in dealing with rules that impose a host of new obligations, and that at times overlap and conflict with one another. This chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together. Source: Eversheds-sutherland.com 403b Plans Amending Your 403b Plan for Updated Hardship Withdrawal Regs A guide to what 403b plan sponsors need to know about upcoming plan amendments for IRS final hardship withdrawal regulations, CARES Act, and SECURE Act. Five key takeaways for 403b plan sponsors. Source: Voya.com »» Click here for More 403b Material Court and Legal Lessons Learned From ERISA Class Action Litigation Arising Out of the "Great Recession" Often fiduciary duties are magnified and called into question when the country is plunged into an economic crisis and retirement plans suffer significant losses. Most notably, we saw an increase in the number of ERISA class action lawsuits in the wake of the Great Recession of 2008. This article analyzes the ERISA litigation trends that emerged after the Great Recession, the lessons learned, and what we may expect in the wake of the economic impacts resulting from the novel coronavirus pandemic, COVID-19. Source: Dechert.com Vail Resorts Wins Dismissal of ERISA Fiduciary Breach Lawsuit A new ruling out of the U.S. District Court for the District of Colorado grants the dismissal motion filed by the defense in an ERISA lawsuit known as Kurtz v. Vail Corp. The underlying lawsuit accuses the Vail Corp. of permitting excessive fees in the Vail Resorts 401k Retirement Plan. Source: Planadviser.com 401k Plan Administrator Sues VALIC Over Surrender Fees Charged to Plan The administrator of the D.L. Markham, DDS, MSD, INC. 401k Plan has filed a lawsuit against the Variable Annuity Life Insurance Co. over fees he says were improperly withheld from plan assets. The insurer is charged with engaging in a prohibited transaction under ERISA when the fees were charged during a move to a new provider, as well as with self-dealing. Source: Planadviser.com DST Systems Settles Lawsuit Over Risky Retirement Plan Investment The lawsuit said the DST Systems Inc. profit sharing and 401k plans were invested too much in Valeant Pharmaceuticals. A settlement amount of $27 million to be paid by DST Systems was reached. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Multiple Employer Plans (MEP) The Mechanics of Moving to a PEP The goal of the provisions of the SECURE Act that created pooled employer plans was to encourage employers that didn't have retirement plans for employees to offer one. But employers that already sponsor a plan may also decide a PEP is a better choice for them and their participants. With a lack of regulatory guidance, plan sponsors can rely on certain existing rules to know the steps to take if they decide to move from a single-employer plan to a pooled employer plan. Source: Plansponsor.com »» Click here for more on Multiple Employer Plans Compliance and Regulatory Tips to Prepare for Your Upcoming 401k Plan Audit: From the Auditor Perspective Audit request lists will soon be going out to Plan Sponsors to confirm audit dates and information request dates. While the receipt of these request lists can cause blood pressure to rise at the plan sponsor, there are some simple tasks the plan sponsor can perform to prepare for the annual audit of their 401k plan, and make the audit process smoother. Whether you are a plan sponsor, TPA, or advisor, here are some tips which will help to make the audit process go smoother for all parties involved. Source: Linkedin.com DOL Issues Missing Participants Guidance On January 12, 2021, the DOL issued three pieces of guidance detailing the DOL's view of what steps plan fiduciaries should take to locate and distribute retirement benefits to missing or non-responsive participants. The guidance is largely consistent with positions taken by DOL in investigations. Source: Groom.com SECURE Act Guidance for 401k Plan Sponsors to Remember in the New Year The IRS continues to provide important guidance for 401k plan sponsors regarding the Setting Every Community Up for Retirement Enhancement Act of 2019. Most immediately impactful is additional guidance concerning long-term, part-time employee eligibility for 401k plans and qualified birth and adoption distributions from 401k plans. Source: Thompsonhine.com »» Click here for more Compliance and Regulatory Material Marketplace News ARA Announces Senior Management Leadership Changes Hub Picks up Assets of Garnett Retirement Group
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