401k Lawsuit Alleges Excessive Adviser Compensation
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Court and Legal 401k Lawsuit Alleges Excessive Adviser Compensation A comprehensive lawsuit filed this week against large AAA member groups alleges that plan participants overpaid for years for investments and services, including compensation to Wells Fargo and Captrust. The defendants did not appear to solicit competitive bids for recordkeeping services and allowed funds with high revenue-sharing to compensate service providers, according to the complaint. Source: Investmentnews.com (registration may be required) Schlichter Excessive Fee Bid Gets Whacked After a split decision on the merits and a $3.1 million settlement, the plaintiffs' attorneys asked for a fee of $5.4 million. Guess what the judge allowed? In the case at hand -- Ramos v. Banner Health -- the plaintiffs just last month lost their appeal of parts of a decision that, largely, favored the fiduciary defendants in the $2.2 billion 401k plan. Source: Napa-net.org Supreme Court Set to Tackle Pleading Standard in Northwestern Retirement Plan Lawsuit On July 2, 2021, the Supreme Court agreed to hear Hughes v. Northwestern, which involves a challenge to investment fees and recordkeeping fees in two 403b plans maintained by Northwestern University. The district court dismissed the complaint about failure to adequately plead a breach of the fiduciary duty of prudence, and the Seventh Circuit affirmed the dismissal. The Supreme Court will now weigh-in for the first time on the critical issue of what allegations are sufficient to state a plausible breach of fiduciary duty claim for excessive investment and recordkeeping fees. Source: Groom.com Sweeping Excessive Fee Suit Targets Motor Club's 401k An excessive fee suit filed by a litigator new to the ERISA space makes a series of new, sweeping allegations (including the plan's advisor and auditor) alongside some familiar challenges. The plaintiffs' arguments are extraordinarily detailed and tread ground(s) not often seen in these type of filings. Source: Napa-net.org Court Affirms Arrangement Between Sponsor and Recordkeeper Not a Prohibited Transaction The 10th U.S. Circuit Court of Appeals was asked to review a lower court's decision in Ramos v. Banner Health, in which participants in Banner Health's 401k plan alleged plan fiduciaries breached their duties under ERISA. Following an eight-day bench trial, the U.S. District Court for the District of Colorado concluded that Banner's uncapped, revenue-sharing agreement with its recordkeeper Fidelity did not constitute a prohibited transaction under ERISA. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Fiduciary and Plan Governance Plan Checkup for Maximizing Outcomes Plan Sponsors have a lot on their plates. Not only must they focus on providing competitive employee benefits, but also protecting themselves against potential litigation. For many, retirement plan responsibilities are among several competing corporate responsibilities, all rightfully demanding full attention. Plan committees must work efficiently and effectively to fulfill all of their plan responsibilities. Here are 12 suggested committee agenda items, which when carried out, can help mitigate fiduciary risks. Source: Porteval.com Four Considerations for Creating a Strong IPS This paper describes four considerations to use in helping determine if an IPS is strong. The overarching theme of these four considerations is thoroughness as it relates to documenting the governance, oversight, investment management, and monitoring/evaluation functions of the investment program. Source: Pnc.com How a 401k Plan Sponsor Can Be Proactive As a 401k plan sponsor, not only is your plan a great benefit for you and your employees, it has some negative aspects if you're not proactive in maintaining it. Future, if you ignore your plan, it could be used as a weapon against you because of the potential liability exposure from litigation by participants or penalties from the IRS or DOL. This article is about how you can be proactive in maintaining your 401k plan. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers How Different Generations Define Retirement There's the conventional way to define retirement: an objective age at which one can exit the workforce, begin collecting Social Security benefits, and have the ability to access retirement savings without penalties. But on the other hand, research has shown the psychology behind retirement to be much more complex. In a review of the literature, you can identify three general perspectives on retirement. Source: Morningstar.com 401k Plan Investors Tilt Further Towards Equities Average asset allocation in equities rose to 70.2% during June, the highest level in 20 years, though the proportion of new contributions going to equities remained at 69.2%. Source: Plansponsor.com Percentage of 401k Participants With Loans Dropping At the end of the first quarter, about 14% of 401k participants had outstanding loans. The percentage fell steadily throughout last year after edging up to 16.3% in the year-ago period from 16.1% in the fourth quarter of 2019. Source: Pionline.com »» Click here for More Studies, Research, and White Papers Legislative and Washington DC House Panel Crafting Bill to Limit IRA Savings House Ways and Means Committee Chairman Richard Neal is mulling legislation that would limit "the total amount of money that can be saved in tax-preferred retirement accounts, and putting an end to the tax-dodging some do when saving in IRAs," he told ThinkAdvisor via email on Thursday. Source: Treasuryandrisk.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Cybersecurity for Plan Fiduciaries: Focus on Account Theft Retirement account theft is one of the risks cropping up in the employee benefits community. If you are a plan sponsor or a plan fiduciary, it's important to make sure you've thought about how to address this risk that is now well above the horizon. As an ERISA fiduciary, you play a key role in helping your participants guard against the theft of their accounts at the hand of cybercriminals. Take the steps noted above and stay abreast of developments in this rapidly evolving area. Source: Plansponsor.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Top 10 Payroll Issues in 401k Plans Payroll-related mistakes can not only be time-consuming and costly for a plan sponsor to correct, but they also may jeopardize a plan's compliance with IRS and DOL regulations. Depending on the severity and magnitude of the correction, it may be necessary to involve legal counsel to make a submission into one of the IRS's corrective programs. Here is a list of the top 10 payroll-related matters most commonly identified in 401k plan audits. Source: Lindquistcpa.com Physical Presence Relief for Elections and Consents On June 24, 2021, the IRS issued Notice 2021-40 which further extends the temporary relief from the "physical presence requirement" previously granted to certain 401k plan elections and consents, and hinted that permanent relief from the requirement might be forthcoming. Source: Compliancedashboard.net »» Click here for more Compliance and Regulatory Material Marketplace News Bolton Announces Acquisition of RSC Advisory Group
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