Newsletter for January 25, 2021
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401k Averages Book 20th Edition Infographic
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In This Issue
Fiduciary and Plan Governance
Does the Investment Duties Regulation Change How Fiduciaries Are Expected to Make Investment Decisions
The more things change the more they stay the same. Or do they? This question should be on every employee benefit plan fiduciary's mind after January 12, 2021, when an amended DOL regulation went into effect changing the standards under which fiduciaries are expected to make investment decisions for ERISA employee benefit plans.
Source: Wagnerlawgroup.com
Where Cybersecurity and Fiduciary Responsibility Meet
It's rare to go a day without seeing a headline about a data breach, fraud, ID theft, or some other cybersecurity issue occurring. As a plan sponsor, you need to make sure the vendors and providers that have access to your employees' data and workplace accounts are safeguarded against data breaches and hackers. You must vet your providers and ensure that they have strict controls in place to protect employees.
Source: Schneiderdowns.com
»» Click here for more Fiduciary and Plan Governance Material
Insight: Studies, Research, and White Papers
SDBAs Among 2021 Benefits Trends: Fidelity
More than 20% of workplace savings plans offer an SDBA along with their other benefits, according to Fidelity internal data. The number of employers that offer self-directed brokerage accounts is up three times over 2010, the company said.
Source: 401kspecialistmag.com
»» Click here for More Studies, Research, and White Papers
Items of Special Interest to Service Providers
Unlocking the Process: Guide to ERISA Individual Prohibited Transaction Exemptions
Congress granted authority to the DOL to grant individual or class prohibited transaction exemptions. From 1996-2020, the DOL granted more than 1,200 individual exemptions from the ERISA prohibited transaction rules. This guide summarizes and collects individual prohibited transaction exemption practices during this period.
Source: Eversheds-Sutherland.com
Recordkeeper Consolidation May Be Coming, But Don't Squeeze the Participant
George and Abigail Revoir of AMRev Consulting, writing in the November 4th, 2020 edition of RPA Convergence opine on recordkeeper consolidation and the ever-widening gap between mega and midsize providers. No question there is revenue pressure in our business, but one comment in their otherwise satisfactory analysis of this trend stopped us in our tracks. The end game, says the Revoirs, is to "monetize the participants."
Source: Nwpsbenefits.com
Court and Legal
When Can 401k Fiduciaries Get Excessive Fee Suits Dismissed? Anatomy of Two Recent Wins
Fiduciaries are wondering if it is ever possible to avoid a trial or extensive discovery if they are sued. Sometimes it is, as two recent federal district court decisions have shown. One was dismissed with prejudice, which means that the plaintiffs can't refile and bring the claims again. These decisions may provide a template for further dismissals of cases filed based on conclusory allegations and speculation rather than the actual conduct of the defendants.
Source: Cohenbuckmann.com
BlackRock 401k Plan Class Action Headed for Trial
A class action alleging that BlackRock entities favored their proprietary funds when selecting investment options for BlackRock's 401k Plan is headed for trial after Judge Haywood S. Gilliam, Jr. denied both parties' motions for summary judgment. BlackRock sought summary judgment on Plaintiffs' claims for breaches of fiduciary duty. The court denied the motion for several reasons.
Source: Benefitslawadvisor.com
Fake 401k Distribution Request Triggers Suit
A new case of 401k theft has led to a lawsuit by the participant, and the plan, against a provider. The suit alleges that on Feb. 14, 2020, "American Trust made an unauthorized distribution in the total amount of $124,105 from Mr. Mandli's Plan account in response to a request for a distribution from an unknown third party."
Source: Asppa.org
Court Filing Details $13M UPenn 403b Lawsuit Settlement
A new court filing in the U.S. District Court for the Eastern District of Pennsylvania describes the terms of a settlement reached between the University of Pennsylvania and plaintiffs in a long-running and complex ERISA fiduciary breach lawsuit.
Source: Planadviser.com
Mercedes-Benz Participants Steer 401k Complaint Into Court
Participants in a 401k plan run by Mercedes-Benz U.S. International sued the company and its fiduciaries, alleging violations of their duties under ERISA. "Failures by ERISA fiduciaries to monitor costs for reasonableness have stark consequences for retirees," said the complaint filed Jan. 19 in a U.S. District Court in Tuscaloosa, Ala.
Source: Pionline.com
ERISA Breaches Cited in Takeda 401k Plan Suit
Three 401k plan participants filed suit against Takeda Pharmaceuticals alleging the company, its executive compensation committee, and officials mismanaged the investment options in the plan. The suit, filed in U.S. District Court in Boston, said the company and other defendants violated the ERISA by utilizing a target-date fund lineup that underperformed compared to comparable target-date funds.
Source: Pionline.com
»» Click here for more Court and Other Legal Issues
Legislative and Washington DC
Yellen Offers Support for Retirement Security Reforms
President-elect Biden's Treasury Secretary nominee Janet Yellen appeared before the Senate Finance Committee on February 19, fielding questions on the economy, taxes, and debt, as well as her views on various retirement security issues. Yellen is widely expected to be confirmed by the Senate, perhaps as soon as this week, so the hearing was, in large part, more of a formality, but the former Federal Reserve chair and Treasury nominee did share some important insights.
Source: Napa-net.org
Biden to Order ESG Rule Review
President Biden will sign executive orders today that will, among other things, press for a review of the Labor Department's recent ruling on ESG investments. The widely anticipated executive orders -- more than a dozen -- are said to direct nearly 100 agency actions aimed at unraveling President Trump's environmental policies.
Source: Napa-net.org
Retirement Plan Provisions in the Consolidated Appropriations Act of 2021
On December 21, 2020, Congress passed the Consolidated Appropriations Act of 2021, a spending bill that combines $900 billion in stimulus relief for the COVID-19 pandemic with a $1.4 trillion omnibus spending bill for the 2021 federal fiscal year. This is a review of the key retirement-related provisions of the Act.
Source: Icemiller.com
»» Click here for more on Legislative and Washington Actions
Compliance and Regulatory
Dealing With Missing Participants in Terminating Puerto Rico 401k Plans
For a host of legal and practical reasons, the only feasible alternative for disposing of the accounts of missing participants in a terminating 401k or other defined contribution retirement plan qualified only in Puerto Rico is, after making reasonable efforts to locate the missing participants, depositing with the proper state unclaimed property fund(s) the retirement money of those participants who cannot be located.
Source: Ogletree.com
Missing Retirement Plan Participants? The DOL Says You Should Follow These Best Practices
In response to ongoing pleas for guidance, the DOL has published an informal outline expressing its views on how retirement plan administrators should be addressing missing or unresponsive participants. Through contrasting lists of "red flags" and "best practices," the publication reveals the DOL's expectations of plan administrators and provides helpful guideposts for them to follow. This article provides a summary of the publication, as well as tips for plan administrators to maintain, in the words of the DOL, a "well-run plan" concerning missing and unresponsive participants.
Source: Bradley.com
»» Click here for more Compliance and Regulatory Material
Marketplace News
DOL Appoints New Members to the 2021 ERISA Advisory Council
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