The ABCs of RFPs
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In This Issue
Fiduciary and Plan Governance One of the most important responsibilities of plan fiduciaries is hiring the right service providers. These providers must do competent-hopefully, superior- work for a fee that is reasonable to the services provided. The best way to fulfill this responsibility is by doing an RFP. Engaging in RFPs can help fiduciaries demonstrate that they haven't hired inappropriate or overly expensive plan providers if their choices are challenged. Source: Cohenbuckmann.com Glide paths aren't just a change in equity and fixed income allocations, there are changes to investment types, too. Understanding how a TDF's glide path works -- how equities and fixed-income-type investments shift as investors age -- is necessary for DC plan sponsors to fulfill their fiduciary duties in fund selection and monitoring plan investments. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Millennials' Readiness for Retirement: A 2019 Update A prior CRR study found that, in 2016, Millennials lagged behind Gen Xers and Late Boomers in retirement preparedness. New data for 2019 show that Millennials are catching up in the labor market and in getting married and buying houses. However, despite also having similar retirement savings, Millennials' huge student debt burden still leaves them well behind prior cohorts in wealth accumulation. Source: Bc.edu Four Big Trends in 401ks, Retirement Plans Key trends in the retirement plan business were the subject of a recent webinar hosted by Vestwell, a digital retirement platform. Although looking at 401ks in particular, the group of industry experts saw ways the advisory industry will keep expanding and changing, especially in the retirement plan area. Source: Thinkadvisor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers What's Old Is New Again: DOL Reinterprets Five-Part Investment Advice Test The DOL dramatically shifted its interpretation of when an investment advice provider is a fiduciary under ERISA in the December 18, 2020 preamble to the "Improving Investment Advice for Workers and Retirees" prohibited transaction class exemption. Specifically, the DOL disavowed its previous interpretation and took the new position that advice regarding the rollover of ERISA plan assets to an individual retirement account would be fiduciary investment advice under ERISA if the remaining requirements of the existing five-part test are satisfied. Source: Thompsonhine.com Court and Legal Participants in Terminated 403b Plan File ERISA Lawsuit A group of 403b plan participants is suing their employer for allegedly keeping imprudent investments as choices in the plan and for causing them to pay excessive fees for plan investments, among other things. According to the ERISA lawsuit, "for the period beginning January 1, 2015, through the date the plan was terminated, May 31, 2019, plan participants lost approximately $4.6 million due to excessive fees and costs as a result of Columbus Regional's breaches of fiduciary duty." Source: Plansponsor.com Excessive Fee Suit Challenges Plan Choices, Fees, Practices A new name in excessive fee litigation emerges, filing suit against a (relatively) smaller plan, treading some new ground, and covering some familiar territory. The participant-plaintiffs here claim that Columbus Regional (which terminated the plan in question effective May 31, 2019, but at the time had approximately $183 million in assets and some 4,700 participants) "failed its duties from start to finish." Source: Napa-net.org »» Click here for more Court and Other Legal Issues Legislative and Washington DC Committee Chairmen Introduce Multiemployer Pension Plan Reform in House Representative Neal, Chair of the House Ways and Means Committee, and Representative Scott, Chair of the House Education and Labor Committee, introduced nearly identical bills, the "Emergency Pension Plan Relief Act of 2021," into the committees they chair. This article covers the key multiemployer plan provisions of the bills, particularly from the standpoint of contributing employers. Source: Octoberthree.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory DOL Announces Fiscal Year 2020 Record-Setting Enforcement Statistics The DOL has issued its fiscal year 2020 enforcement fact sheet, highlighting the recovery of over $3.1 billion in direct payments to plans, participants, and beneficiaries. Of the $3.1 billion in recovered assets, $2.602 billion resulted from enforcement actions, and $456 million was generated by benefit recoveries from informal complaint resolution. For the year, the DOL handled 171,863 inquiries, many received through the EBSA's toll-free number and website, and opened 357 investigations based on those inquiries. Source: Thomsonreuters.com U.S. and Puerto Rico Issue Rules on Non-COVID-19 Disaster Relief for Retirement Plans Last year, in response to the COVID-19 pandemic, the United States Congress and the Puerto Rico Department of Treasury granted favorable tax treatment to coronavirus-related distributions and participant loans from U.S. and Puerto Rico qualified plans. Recently, both jurisdictions extended similar tax treatment to certain distributions, hardship withdrawals, and plan loans related to non-COVID-19 disasters. Source: Ogletree.com The New E-Delivery Rule: The Price of Simplification The DOL has simplified the delivery of retirement plan information to participants through its new electronic disclosure rule. Although the E-Delivery Rule promises to expand the use of electronic delivery, retirement plans still retain a fiduciary duty to protect participants' personal information from cybertheft. Thus, retirement plans taking advantage of the new rule may face increased exposure to ERISA fiduciary breach claims alleging inadequate cybersecurity measures. This article discusses the DOL's E-Delivery Rule and the fiduciary considerations applicable to plans that rely on the new rule. Source: Asppa.org Correcting Average Deferral Percentage Test Failures The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring highly compensated employees. A series of nondiscrimination tests were devised to measure whether a plan's design or operation tends to favor the HCEs over the non-highly compensated employees. This article dives into the different methods of correcting for an ADP test failure. Source: Legacyrsllc.com The Internal Revenue Service has announced increases to user fees for letter rulings and determinations with respect to employee plans. The increases will take effect on January 4, 2021. Source: Jdsupra.com IRS Releases Final QPLO Regulations Plan participants have more time to roll over certain plan loan offsets under the Tax Cuts & Jobs Act of 2017. These are known as qualified plan loan offsets. In response to this legislative change, the IRS released proposed regulations in August 2020. The IRS finalized the regulations in December 2020, with only one modification: the applicability date. Source: Futureplan.com Missing Participants: A Cruel Game of Hide-and-Seek - What to Do When a Participant Can't Be Found? It often feels like a game of hide-and-seek for plan sponsors that are unable to find a participant or beneficiary to pay retirement benefits that are due. The administrative procedure seems cut and dry; however, an issue arises when there is old contact information, or the participant or beneficiary doesn't cash the check. There has been some guidance about the proper procedures a plan sponsor should take to try to locate missing participants and beneficiaries, but not much. Thankfully, that has changed recently with the DOL providing best practices to help plan sponsors in this hide-and-seek game. This article discusses strategies that are provided by the DOL and ways to implement those strategies in hopes that it will help you win this game. Source: Belfint.com Partial Plan Terminations: An Update As 2020 drew to a close, Congress enacted a special rule on partial terminations as part of the Consolidated Appropriations Act. The special rule is protective of employers, partly because it makes it more difficult to trigger a partial termination during certain years, but primarily because it gives employers certainty that no partial termination has occurred if a special test is met. Source: Verrill-law.com »» Click here for more Compliance and Regulatory Material Marketplace News Creative Planning Acquires Retirement Plan Division of IRON Financial Integrated Partners, Massachusetts Society of CPAs Join Forces to Bring PEPs to MA CPA Firms NFP Purchases Pension Advisors
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