CITs Have Different Fiduciary Implications Than Mutual Funds
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In This Issue
Fiduciary and Plan Governance CITs Have Different Fiduciary Implications Than Mutual Funds Plan sponsors considering collective investment trusts for their 401k plans should focus on the product provider's CIT governance policies and procedures, according to industry experts. Source: Planadviser.com There is a growing trend of using participant data to cross-sell financial products unrelated to plan recordkeeping by large recordkeepers and asset custodians of employer-sponsored retirement plans. In light of the fact that plan fiduciaries are ultimately legally responsible for the management and mismanagement of a retirement plan, this trend to use participant data may raise issues for employers in their role as plan sponsors and fiduciaries. Source: Ogletree.com The Role of White Label Funds in Today's DC Plans Using multi-manager white label investment funds in a defined contribution plan's core lineup can potentially bring significant diversification and return advantages over conventional single-manager funds. Source: Wtwco.com Blackstone Says Alternative Assets Are Headed for Your 401k Alternative assets will eventually find their way into 401k plans, predicted Joan Solotar, global head of private wealth solutions at Blackstone Inc. Alternative assets like real estate, private debt, and private equity are seen as a way to diversify and earn returns uncorrelated to traditional financial markets. They were once the sole purview of large institutional investors who don't need assets to be particularly liquid, but the creation of liquidity in certain alternative products aimed at retail investors has broadened their appeal. Source: Investmentnews.com (registration may be required) »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers 401k Auto-Enrollment Proves Popular Legislation moving through Congress would prompt more employers to automatically enroll new employees in 401k or similar defined contribution retirement plans and to increase participants' savings rates over time. Even without new mandates to do so, however, more employers are adopting automatic features to increase employee participation and to encourage employees to save enough for a secure retirement. Source: Shrm.org Alight Solutions 401k Index: First Quarter 2022 Observations With volatility returning to Wall Street, 401k investors were busy traders in the first quarter of 2022, according to the Alight Solutions 401k Index. There were 16 above-normal trading days in the quarter, a stark contrast to the 3 above-normal days seen in 2021. Net transfers as a percentage of starting balances were 0.46%, nearly equal to the percentage seen in the prior twelve months (0.53%). Net trading activity significantly favored fixed income. Source: Alight.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Time to Reset the Advisor-TPA Partnership What should advisors be asking their TPAs? What should they be getting from them? What makes the difference between a good TPA and a bad one? And how can advisors and TPAs improve their working relationship and serve plan sponsors as a cohesive team? This panel discussion at the 2022 NAPA 401k Summit provides an interesting perspective on the relationship between TPAs and advisors, their work and connections, and the approach and mindset advisors follow. TPAs may find this information and insight useful and instructive. Source: Asppa.org Get Ready to Explain Lifetime Income Illustrations Highlights and discussion around the question, "When are the new lifetime income illustrations due and what should I be telling my clients who are 401k sponsors and participants about them?" Source: Napa-net.org 403b Plans Attorney Calls Proposed Changes to RMDs From 403bs "A Big Deal" A change to required minimum distribution rules for 403b retirement plans proposed by the IRS is causing industry chatter. Proposed changes would require a participant to take calculated amounts from each 403b contract they have. Source: Planadviser.com 403b Assets Up, but Fees Can Have Big Effect, Says GAO The parties in an excessive fee suit focused on the adoption of collective investment trusts have come to terms. The suit alleges that "defendants selected and retained Wells Fargo products over materially identical, yet cheaper, non-proprietary alternatives; selected Wells Fargo products that had no performance history that could form the basis of a fiduciary's objective decision-making process; and failed to remove proprietary funds despite sustained underperformance." More specifically, the plaintiffs took issue with the use of target-date CITs with a relatively short (less than three years) track record. Source: Ntsa-net.org »» Click here for More 403b Material Court and Legal The original model of an excessive fee lawsuit under ERISA was to allege that the plan fiduciary committee failed to conduct a request-for-proposal to ensure that the plan had the lowest possible costs. But plaintiff law firms are now challenging plans that negotiated low fees based on competitive bidding. They know it is worth the minimal cost to file a lawsuit because if they can somehow get passed a motion to dismiss, they have settlement leverage based on large-plan damage models that are, in the words of a leading plaintiff firm, "astronomical." The only protection for plan sponsors is the "careful, context scrutiny" that federal court judges are required to perform to protect plan fiduciaries. Source: Euclidspecialty.com Former Goldman Sachs Workers Achieve Class Status in 401k Mismanagement Case U.S. District Judge Edgardo Ramos granted class status to tens of thousands of Goldman Sachs Group Inc. ex-employees in an ERISA suit related to the mismanagement of its employee 401k plan. In support of its motion to certify the class, Falberg also pointed to other courts which recently have certified ERISA classes of retirement plan participants suing financial services providers for unfairly promoting proprietary funds in their plans. Source: Hallbenefitslaw.com Wells Fargo Agrees to Pay $32.5 Million to Settle ERISA Suit Parties in a lawsuit against Wells Fargo 401k plan fiduciaries have filed a motion for preliminary approval of a settlement. The lawsuit accused Wells Fargo of using its 401k plan to seed new proprietary funds, among other things. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Broad "SECURE 2.0" Retirement Bill Gets Overwhelming House Approval The wide-ranging bill contains provisions aimed at expanding plan coverage, boosting savings, increasing lifetime income options, and streamlining plan administration. Several revenue-raising proposals would direct more workplace savings into after-tax Roth accounts. In addition, the DOL would have to review its fiduciary guidance for defined benefit pension risk transfers. This article highlights key SECURE 2.0 provisions of interest to employers. Source: Mercer.com SECURE 2.0: What Employers Need to Know On March 29, 2022, the House of Representatives passed the Securing a Strong Retirement Act of 2022 ("SECURE 2.0", HR 2954). The vote was largely supported by both parties (414-5). The Senate will likely act on the bill later this spring. While it is expected that changes will be made in the Senate version, it is widely anticipated that the legislation will ultimately become law in some form. This article highlights a few provisions of the bill that may be of interest to employers. Source: Benefitslawadvisor.com House Committee Advances 401k Spousal Consent Bill One week after the House passed SECURE 2.0, the House Education and Labor Committee advanced The Protecting America's Retirement Security Act (H.R. 7310) on Tuesday. It purports to strengthen the retirement system to protect workers' retirement savings and better support families and employers. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Marketplace News Ascensus Closes Newport Merger Agreement Hub International Acquires Illinois Based 401k Advisors Capital Group Announces New Target-Date Fund Service Empower Closes Acquisition of Prudential Financial Retirement Business
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