DOL Threatens to Investigate Fiduciaries Over Cryptocurrency in 401ks
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Fiduciary and Plan Governance DOL Threatens to Investigate Fiduciaries Over Cryptocurrency in 401ks Compliance Assistance Release No. 2022-01 is a significant departure from DOL's established regulatory norms. The author states that they are not aware of any other instance in which DOL has made such sweeping statements about the potential prudence of an entire asset class. DOL has recently elected to back away from proposals to create special standards for specific asset classes. However, in the Release, DOL implies that the agency will presume that fiduciaries making cryptocurrencies available have acted imprudently. Source: Groom.com DOL Makes No Secret of Its Concerns About Crypto In a recent compliance assistance release, the DOL said that "at this early stage in the history of cryptocurrencies, [the DOL] has serious concerns about the prudence of a fiduciary's decision to expose a 401k plan's participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies." Cryptocurrency presents "significant risks and challenges to participants' retirement accounts, including significant risks of fraud, theft, and loss," the DOL wrote. Source: Eversheds-Sutherland.com Retirement Plan Fiduciaries Must Wisely Consider All Investment Options Retirement plan fiduciaries have a duty to monitor investment options continuously and remove all imprudent ones, a unanimous U.S. Supreme Court recently ruled in a much-anticipated decision. In this opinion, the Court made it clear that fiduciaries can't ignore imprudent investment options in 401ks or other retirement plans even if other, prudent choices are available. Source: HRdailyadvisor.blr.com While the plan asset issue continues to be a significant one concerning investments in private equity funds, recently the focus has been upon offering private equity funds as a part of an asset allocation fund, an issue that had been addressed both by the Department of Labor and a California federal district court on multiple occasions, as discussed here. Source: Wagnerlawgroup.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Reviewing Fees, IPS Top Focus of Large DC Plan Sponsors Large plan sponsors continue to be laser-focused on fees, but they also will be taking a close look at their investment policy statements and conducting formal fiduciary training in the coming year. These are among the findings in Callan's 2022 Defined Contribution Trends Survey. Now in its 15th year, the survey reviews key findings from 2021 and expectations for 2022 for DC plan sponsors. Source: Napa-net.org Retirement Savers Show Confidence in Current 401k Model A recent ICI survey found that a majority of Americans dislike the idea of government-controlled investment options and are confident in their ability to make their own asset management decisions. Source: Planadviser.com Retirement Policy: Aligning Plan Design With Effective Employee Engagement This 10-page paper addresses how retirement program design can impact decisions that participants make to improve retirement security. Most defined contribution retirement plans, such as 401k plans, leave important and sometimes complex choices to the individual. Underlying the DC retirement plan structure is the assumption that individuals are equipped to make decisions in their own best interests, and that they will do so. However, this assumption might not always be accurate, especially if individuals lack the resources and/or knowledge needed to make informed choices. Source: Actuary.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Learn How to Protect Your 401k Clients From Cyberattacks Cyber insecurity is a serious problem. Only 76% of RIAs hold cyber insurance, leaving 24% unprotected in case of a breach in addition to being exposed to these threats. Of those with cyber insurance, the median coverage amount is only $1 million. These assets and the personal information that come along with them are even more vulnerable due to the numerous parties collaborating on them, from recordkeepers to payroll companies to TPAs to plan sponsors and everyone else in between. To combat these online threats, start by asking questions. Source: Fiduciarydecisions.com 403b Plans Defined Contribution Plan Profile: A Close Look at ERISA 403b Plans, 2018 This 68-page report focuses on ERISA 403b plans in 2018. It first analyzes 403b plans in the Department of Labor 2018 Form 5500 Research File. Focus then shifts to more than 6,200 audited 403b plans in the BrightScope Defined Contribution Plan Database, which typically have 100 participants or more. Source: Ici.org »» Click here for More 403b Material Court and Legal Class Action Suit Challenges Big CUSIP Licensing Fees A class-action complaint was filed last week in the Southern District of New York that could have a ripple effect on the retirement industry's infrastructure, and, at least potentially, the costs of operation. Source: Napa-net.org U.S. Supreme Court Rules On Fiduciary Responsibilities Are plan fiduciaries protected from excessive fee lawsuits just because they offer participants a menu of investment funds that includes some low-fee investment choices? Or are plan sponsors and other fiduciaries required to do more than that? The answer to these questions may determine whether an excessive fee lawsuit is dismissed quickly and before an expensive, time-consuming trial. Source: Penchecks.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Why Account Consolidation is Vital to Reduce 401k Cybersecurity Risk With $10 trillion in 401k and other defined contribution retirement assets to safeguard, retirement industry regulators are intensely focused on the issue of cybersecurity. Account consolidation can lower retirement savings cybersecurity risks by minimizing the sheer number of fraud-prone, small-balance retirement savings accounts. Source: 401kspecialistmag.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Easing the Potential Burden of Abandoned 401k Accounts The current environment not only makes it hard to build and manage an effective workforce but plan sponsors also may face problems down the road when departing workers leave their 401k balances with their previous employers. These abandoned accounts can lead to penalties, additional administrative fees, and administrative challenges for employers. How can plan sponsors resolve these issues? Source: Berrydunn.com How to Shoot Yourself in the Foot With Your SPD Benefit plan sponsors sometimes send out Summary Plan Descriptions having given too little thought to the legal consequences. Two recent cases illustrate how an organization can end up in serious and costly litigation based on statements that did not have to be made in SPDs that did not have to be issued. Source: Verrill-law.com Do Employers Need a CISO for ERISA Compliance? As DOL investigators grapple with applying the Guidance along with their internal resources, it remains unclear whether they will be fixated on requiring in all cases an express designation of a Chief Information Security Officer by all retirement plan sponsors and plan service providers. Of course, it will be important for organizations to clearly define and assign information security roles and responsibilities. The lack of a CISO designation alone should not necessarily mean an organization's data security efforts are rudderless. Source: Benefitslawadvisor.com New Audit Rules for Employee Benefits Plans Take Effect After the U.S. Department of Labor expressed concerns about the quality of audits in employee benefit plans, the American Institute of Certified Public Accountants released a Statement on Auditing Standards (SAS 136) to address those concerns. Originally slated to go into effect in 2020, AICPA delayed implementing the audit rules for one year due to the COVID-19 pandemic. As a result, SAS 136 will apply to 2021 employee benefit plan audits. Source: Hallbenefitslaw.com »» Click here for more Compliance and Regulatory Material Marketplace News 401k Index Underscores Investor Jitters
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