When Recordkeepers Merge
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Fiduciary and Plan Governance Businesses that provide recordkeeping services to defined contribution retirement plans are merging at a dizzying rate. What considerations should plan fiduciaries resolve when a competitor or aggregator acquires their recordkeeper or third-party administration firm? Source: Rolandcriss.com Don't Be Fooled by These 401k Conflicts of Interest 401k conflicts of interest misalign the interests of employers and 401k providers. While employers have a fiduciary responsibility to choose a 401k provider with "reasonable" administration fees and cost-efficient investments to make retirement as affordable as possible for plan participants, conflicted 401k providers have a financial incentive to push overpriced administration services and investments when lower-priced - but otherwise comparable - alternatives are available. How do employers avoid this trap? Here are four ways a 401k provider can profit unduly at the expense of plan participants. Source: Employeefiduciary.com A Higher Level of Fiduciary Oversight Could be Required for 401k Plan Brokerage Windows Fiduciaries of 401k plans and other retirement plans know that they must prudently monitor the investment options available to participants in the plan, but are they monitoring participants' investments made through a plan's brokerage window? Recent commentary from the DOL on cryptocurrency investments suggests maybe fiduciaries should be and that the DOL may check in on that soon. Source: Employeebenefitslawblog.com How You Deal With 401k Plan Provider Cold Calls As a 401k plan sponsor, the details of your plan on your annual Form 5500 are available to be publicly viewed. There is a whole cottage industry within the retirement plan industry where details of your plan are sold to plan providers that want information for plan prospecting. So expect the phone calls, emails, and even regular mail from plan providers that want your business. This article is all about how to deal with plan providers that are contacting you for your business. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers More 401k Participants Say Having ESG Options Could Inspire Them to Increase Contribution Rate According to the Schroders 2022 U.S. Retirement Survey, 74% of defined contribution plan participants who lack or don't know if they have ESG investment options in their plan, said they would or might increase their contribution rate if offered ESG options. This is up from 69% who said the same in 2021. Source: Businesswire.com OECD Issues Recommendations for the "Good" Design of DC Retirement Plans Because DC retirement plans have increasingly become an integral, if not the main, part of most countries' overall pension systems, the Organization for Economic Co-operation and Development recently issued several recommendations for the implementation and management of these plans. The recommendations are intended to build trust in the design of DC plans by ensuring that the best interest of plan participants is considered, as well as to improve the robustness of retirement systems. Source: Georgetown.edu »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers How to Help 401k Plan Sponsors Cut Through ESG Confusion When it comes to Environmental, Social, and Governance investing, regulatory changes are a big source of confusion for advisors and plan sponsors. "It's no surprise," said Bonnie Treichel, Chief Solutions Officer at Endeavor Retirement, "the apparent ESG regulatory back-and-forth over the past several years is enough to make even an ERISA attorney's head spin." The good news: When it comes to ESG, she's confident that advisors and plan sponsors can move forward. Source: 401kspecialistmag.com Industry Groups Push Back on Recent DOL Rulemaking Practices Spurred by the recent cryptocurrency "compliance assistance release," nearly a dozen industry trade groups -- including the U.S. Chamber of Commerce -- have expressed concern about "a trend at EBSA away from rulemaking based on a robust notice and comment process." Source: Asppa.org 403b Plans Proposed IRS RMD Regulations Present Challenges, Risks for 403b Plans The IRS is strategically working to execute the statutory changes that were outlined by the SECURE Act of 2019. However, the IRS's efforts to streamline the required minimum distribution requirements for 403b plans with Section 401(a) qualified plans, such as 401k plans, may have unforeseen challenges and risks. Source: Employeebenefitsblog.com Study Finds Wide Range in 403b Plan Fees A key finding of a recent GAO study is that fees for 403b plans varied widely. The agency surveyed ERISA and non-ERISA plan sponsors and service providers and reviewed the most recent Form 5500 data. It noted in its report that non-ERISA 403b plans are not required to file a Form 5500 with the Department of Labor, making it difficult to get information about this segment of the market. Source: Plansponsor.com »» Click here for More 403b Material Court and Legal Ninth Circuit Revives Fee Challenge to Salesforce.com 401k Plan The Ninth Circuit became the first circuit court to rule in a 401k plan fee and investment litigation following the Supreme Court's January 2022 decision in Hughes v. Northwestern University. In Davis v. Salesforce.com, Inc., the Ninth Circuit, without discussing Hughes, upheld the viability of the types of claims that Hughes reinstated and remanded for further review. Source: Erisapracticecenter.com Victim of an "Excessive" Investment Fee Case Has Low-Cost Vanguard Target-Date Funds The plaintiffs, in this case, assert that a few active funds are imprudent, but do not disclose that the plan's QDIA with the majority of plan assets is invested in the Vanguard index target-date funds, the gold standard of institutional investments. The author writes, "This is the third time in the last month that the plaintiff excessive fee bar has filed a misleading complaint alleging excessive investment fees against a plan with overall low investment costs." Source: Euclidspecialty.com Ninth Circuit Gives Excessive Fee Plaintiffs Another Chance In the first ruling since the Supreme Court's Hughes v. Northwestern University decision, an appellate court has resurrected a plaintiffs' case in an excessive fee case that had been rejected at the district court level. Source: Asppa.org »» Click here for more Court and Other Legal Issues Legislative and Washington DC A First Look at Secure 2.0: New Requirements for Plan Sponsors The U.S. House of Representatives passed H.R. 2954, entitled "Securing a Strong Retirement Act," which would, among other things, impose additional requirements on employers that sponsor 401k and 403b plans. Secure 2.0 has not yet been passed by the Senate and is likely to change if passed by the Senate. Nevertheless, this is an overview of some of the provisions included in the House version of Secure 2.0 provides a preview of the types of changes that retirement plans sponsors may be required (or permitted) to implement, as early as this year or in 2023. Source: Workforcebulletin.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory IRS Proposes Amendments to the RMD Rules The IRS published proposed amendments to the rules on required minimum distributions, addressing changes made by the SECURE Act. The IRS's proposed rules are complicated and lengthy -- running to 64 pages in the Federal Register -- and individuals and their advisors will need time to fully digest them. While the proposed rules shed light on many important areas, this article will focus on the parts that address the SECURE Act's changes to required distributions to beneficiaries. Source: Jpmorgan.com New Crypto Guidance Rewrites Rules on 401k Brokerage Window New cryptocurrency guidance from the DOL threatens to upend the way regulators treat workplace retirement plans that allow participants to trade individual stocks and bonds on their own. Brokerage windows historically have been mostly off-limits to DOL regulators. That could change with the Labor Department's new playbook for cryptocurrency in 401ks. Source: Bloomberglaw.com »» Click here for more Compliance and Regulatory Material Marketplace News DOL Announces Leadership, New Members to ERISA Advisory Council NAPA Announces New Leadership for 2022-23 LeafHouse-iJoin Managed Account Program Expands RK Reach
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