Insight: Studies, Research, and White Papers

Shining a Light on What Participants Want

Fintech has broad acceptance among younger people. As digital natives, younger generations are more open to digital-first ways of managing their finances. Results from the 2021 PLANSPONSOR Participant Survey indicate that 87% of respondents age 23 to 29 reported using some sort of fintech, and that percentage also holds for the 30 to 39 age demographic. The number drops to 75% for the 40 to 49 age group and 58% for 50- to 59-year-olds. The survey also suggests that the use of fintech correlates with participants' engagement with their plans.

Source: Planadviser.com

EBSA Reports Retirement Plan-Growth

The DOL's Employee Benefit Security Administration has released a report that shows that retirement plans are growing by all measures: number of plans, participants, assets, contributions, and disbursements.

Source: Asppa.org

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Fiduciary and Plan Governance

Latest Swing in ESG Investments and ERISA's Fiduciary Duties

For those of you following the saga of ERISA's fiduciary duties and ESG investing, we are nearing a possible finish line. The latest turn in the saga came when the DOL issued a new set of proposed regulations this month. The approach taken by the DOL comes as no surprise. Looking at the broader ESG shifts in the regulatory environment, the DOL regulations create symmetry with SEC activities under Gary Gensler's helm as the SEC's taken a very vocal approach on the role of ESG factors in an investor's ability to assess the value of an investment.

Source: Beneficiallyyours.com

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Items of Special Interest to Service Providers

DOL Delays Advice Exemption Enforcement Against Good Faith Fiduciaries

DOL's PTE 2020-02 transition relief includes two components. First, for the period from December 21, 2021, through January 31, 2022, DOL will not pursue prohibited transaction claims against invest. advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have otherwise been exempted under PTE 2020-02 or treat such fiduciaries as violating the applicable prohibited transaction rules. Second, DOL extended express relief through June 30, 2022, to certain rollover recommendation conditions under PTE 2020-02.

Source: Groom.com

Field Assistance Bulletin No. 2021-02

This document announces a temporary enforcement policy related to the Department of Labor's prohibited transaction exemption (PTE) 2020-02.

Source: Dol.gov

Court and Legal

Law Firm Takes Aim at Another Big 4 Accounting Firm Retirement Plans

Taking a page (literally) from its recent excessive fee suit against the fiduciaries of the Deloitte 401k Plan, a litigation firm has made nearly identical claims against another of the "Big 4."

Source: Napa-net.org

Walgreen Co. Agrees to Settle Suit Challenging Underperforming TDFs

Plaintiffs in a lawsuit alleging fiduciaries of the Walgreen Profit-Sharing Retirement Plan breached their fiduciary duties by selecting and retaining poorly performing target-date funds for the plan have filed a motion for preliminary approval of a settlement agreement. The challenged target-date funds have already been taken out of the plan, and the defendants have agreed to pay $13.75 million into a settlement fund.

Source: Planadviser.com

KPMG, Fiduciaries Face ERISA Lawsuit From Former 401k Participants

Former participants in a KPMG 401k plan have sued the company and plan fiduciaries, alleging a series of ERISA violations. "Plan fiduciaries failed to administer the plan in a prudent manner," said the complaint filed Tuesday in U.S. District Court in Newark, N.J. The complaint criticized "the selection (and maintenance) of several funds … and payment of excessive record-keeping and administration fees that wasted the assets of the plan and the assets of participants because of unnecessary costs."

Source: Pionline.com

Court Limits Defendants in Fiduciary Breach Lawsuit

In Luense v. Konica Minolta Business Solutions U.S.A., Inc., a federal trial court dismissed certain allegations of a putative class action lawsuit brought by 401k plan participants, because they failed to prove that the defendants were fiduciaries when acting as alleged in the complaint.

Source: Hallbenefitslaw.com

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Legislative and Washington DC

Retirement, Mega Roth Provisions Dropped From Reconciliation Bill

While most of the news coverage on what was originally cast as a $3.5 trillion reconciliation bill has concentrated on a host of progressive initiatives, a number of key retirement-related provisions were also under consideration, until last night. Those included a requirement that most employers (with more than 6 workers, operating for a couple of years) begin automatically enrolling their employees in IRAs or 401k-type plans, as well as those outlined here.

Source: Asppa.org

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Cyber and Plan Security

Surviving a DOL Cybersecurity Audit: A Cybersecurity Action Plan for 401k Fiduciaries

Whatever a particular fiduciary's degree of involvement with cybersecurity may be, the DOL's enforcement initiative should prompt the fiduciary to get ready for the scrutiny of their cybersecurity preparedness and oversight of the preparedness of their defined contribution retirement plan service providers, for example, 401k plan recordkeeper or institutional trustee. Whether a fiduciary has been highly engaged with cybersecurity or not, this is article outlines a fiduciary action plan.

Source: Keightleyashner.com

Cybersecurity Preparedness Checklist for Plan Fiduciaries

Fiduciaries should complete this checklist for each service provider, for example, a payroll provider, 401k plan recordkeeper and administrative service provider, and an institutional trustee. Neither the DOL guidance nor this checklist ranks or assigns relative importance to the questions and practices it describes. To the extent questions in this checklist are answered in the negative, consideration should be given to potential changes in policy, procedures, contract terms, and/or monitoring, as appropriate. Answering "yes" to questions provides a degree of assurance but is no guarantee that fiduciary conduct would be considered prudent.

Source: Keightleyashner.com

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Compliance and Regulatory

Updating Your Plan's Safe Harbor Notice

As the end of the year approaches, now is the time for safe harbor 401k plan sponsors to prepare their annual safe harbor notices. For a plan sponsor that has previously sent out the safe harbor notice, last year's notice should be updated for any changes. This may include updating the date of the notice, annual contribution limits, any deferral changes, any employer contribution changes (including vesting schedules), and any distribution changes.

Source: Spotlightonbenefits.com

Deemed Distributions Can Be Triggered by More Than Just Loan Nonpayment

Plan sponsors might be most familiar with the failure that occurs when a participant loan goes into default if payments are not made. But the IRS says failures also could occur when participant loans exceed the maximum dollar amount, have payment schedules that do not meet the time or payment requirements or are not legally enforceable agreements.

Source: Plansponsor.com

What Plan Sponsors Need to Know About SOC Reports

Most 401k and other benefit plans outsource the vast majority of plan activities to a service organization (e.g., recordkeepers/custodians and payroll service providers). Most service organizations will have a Service Organization Controls report that documents internal controls over financial reporting as well as the results of the tests of those controls for operating effectiveness. Information contained in the SOC report helps plan sponsors act in the best interests of their plan participants, which is part of the plan sponsor's fiduciary duty.

Source: Eisneramper.com

IRS Issues Summary Regarding Hardship Distributions From 401k Plans

The IRS has updated its "Issue Snapshot" summarizing the requirements for Hardship Distributions From 401k plans. These latest updates incorporate changes made by the Bipartisan Budget Act of 2018. The updated issue snapshot exclusively focuses on the current rules and foregoes virtually all mention of the restrictions that applied to hardship distributions before 2020, which is before the effective date of the amended regulations.

Source: Hallbenefitslaw.com

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Marketplace News

Definiti Expands Operations Into California and Southeast

This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted.