Fiduciary and Plan Governance

DOL Stance on Cryptocurrency in 401k Plans Becomes a Political Football

A recent release by the DOL raising concerns about plan sponsors allowing cryptocurrency investments in 401k plans has gotten the attention of both sides of the Congressional aisle as well as industry groups. Some of the reactions to the release have sought to convince the DOL to take a step back, but the DOL has indicated on several occasions that it has no intention of doing so.

Source: Natlawreview.com

Fiduciary Vulnerability Takes a Hit

The legal community's persistent emphasis on fees paid by retirement plans to their service providers has set the stage for a turn in the vulnerability of the individuals who oversee retirement plans. Fiduciary liability insurers have taken note of the recent surge in lawsuits leveled against employers and their executives for allowing service providers to charge excessive fees to the retirement plans they sponsor and manage. The result is a significant increase in many employers' risk exposure.

Source: Rolandcriss.com

Key Considerations for Committees Seeking DC Plan Help

Plan sponsors have the tremendous responsibility of being stewards of DC plan assets on behalf of their participants. Adding to the level of responsibility is the increased fiduciary scrutiny of legislators and regulators, as well as the ongoing evolution of the retirement landscape. It is no wonder that nearly 59% of plan sponsors use an advisor. This article offers a series of themes to help committees assess a DC plan consultant partner and select one that will enhance your plan's oversight activities.

Source: Planpilot.com

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Insight: Studies, Research, and White Papers

Small Business Owners Still Resistant to Starting a 401k Plan: Survey

At a time when many companies are boosting 401k benefits to attract and retain employees in a tight labor market, 74 percent of small businesses are still going without any plan at all. Key findings in new research commissioned by ShareBuilder 401k show that owners believe their business is too small and that 401(k)s are too costly. The survey, that polled 500 small business owners from across the country, reveals that only 26 percent currently offer a 401k plan. Responders cited three main reasons for not starting a plan.

Source: Prnewswire.com

Got a Retirement Plan? Race Plays a Role

A new study takes a close look at who these people are and shows stark differences along racial lines. A large majority of Hispanic workers in the private sector -- two out of every three -- do not have access to a pension or 401k-style plan, and more than half of Black workers do not have access. Although the numbers are lower for Asians (45 percent) and whites (42 percent), they are still substantial.

Source: Bc.edu

2022 RCS Fact Sheet: Expectations About Retirement

Many workers continue to say they are behind in their retirement preparations, including saving for retirement. Consequently, what sources of income do workers expect to receive in retirement? How do workers' expectations align with retirees' experiences?

Source: Ebri.org

2022 RCS Fact Sheet: Retirement Confidence

One in three Americans feel very confident about their ability to have enough money to live comfortably throughout their retirement years. Workers who say debt is a problem are, not surprisingly, less confident, while those who have a retirement plan are remarkably more confident.

Source: Ebri.org

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403b Plans

Top Five Operational Errors of 403b Plans

No matter how hard we try, there are mistakes we are doomed to make again and again, even when we know the rules all too well. The reasons are valid, and they are countless: mindlessness, being in a rush, employee turnover, deadlines, distractions, the complexity of the rules, and failure to verify the plan provisions. Not surprisingly, the list of common mistakes financial statement auditors find is nearly identical to the list of common errors published by the IRS. Whether you have a large plan or a small plan, you should perform frequent self-reviews to ensure that you are not systematically making the following top five common mistakes.

Source: Belfint.com

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Court and Legal

Data Breach Suit Targets Consultant

A consulting firm's data breach has triggered a second class-action lawsuit by an affected participant on behalf of a class of some 2,500,000 individuals. The suit, brought by plaintiff Greg Torrano, claims that 2,537,261 individuals signed up for benefits plans through their employers only to subsequently find out personally identifiable information, including names, birthdates, and Social Security numbers, had been stolen in a data breach.

Source: Ntsa-net.org

Insights From the First Twenty-Five Excessive Fee and Investment Imprudence Cases of 2022

The most common excess fee claim filed this year is against plans that allegedly have high recordkeeping fees and investments in high-fee retail share classes, led by a concerted attack against plans in the active Fidelity Freedom target-date funds. From the author's perspective, the most concerning development are that plaintiffs have been filing cases challenging isolated actively managed investments in plans with otherwise overall low fees. This article provides insights from the first twenty-five excessive fee and imprudence cases filed against defined contribution plans in 2022.

Source: Euclidspecialty.com

Another Circuit Court Rules on ERISA Arbitration Rules

The 6th U.S. Circuit Court of Appeals has ruled that certain types of ERISA claims, while brought by individual participants, ultimately belong to the plan as a whole, meaning individual arbitration agreements cannot as a matter of course prevent such claims from proceeding in court.

Source: Planadviser.com

The O'Reilly Automotive Excessive Fee Case is Based on False Recordkeeping Fees

The author writes, "Plaintiff law firms and their clients have the correct numbers, but continue to file misleading lawsuits... This time it is a case filed by the Capozzi Adler law firm on May 2, 2022, against O'Reilly Automotive, Inc. The lawsuit of former O'Reilly employees alleges that the recordkeeping fee was $49.55 per participant in the last year listed in the lawsuit. But that number is wrong. Plaintiffs ignored the truthful data from their participant fee disclosure that the actual recordkeeping fee was a very reasonable $31 per participant."

Source: Euclidspecialty.com

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Legislative and Washington DC

Tuberville Introduces Crypto Bill, as Warren Grills Fidelity

The DOL's March warning about cryptocurrency, along with Fidelity's decision to move forward with a new "digital assets" capability for 401k plans, has set off a firestorm in Washington. One of the latest developments comes from Sen. Tommy Tuberville who has introduced legislation to address what he describes as preserving the ability of retirement savers to invest their 401k funds as they see fit, including investments in cryptocurrency. In the meantime, Sens. Elizabeth Warren and Tina Smith sent a letter to Fidelity CEO Abigail Johnson in response to the firm's decision to allow Bitcoin investments for 401k plans, given the DOL's warning about allowing crypto investments in 401k plans.

Source: Asppa.org

Here's How the Senate Could Change Your 401k plan

The US Senate has retirement on the brain, and it's not because the average age of the legislative body is 64. A group of new bills that could change the way Americans save for retirement have landed on lawmakers' desks this spring. The proposals have broad, bipartisan support and a clear path forward, say experts. If Senators can reconcile their ideas into a concise package, President Biden could sign the changes into law before Congress' August recess. Here's a look at the changes under consideration.

Source: Cnn.com

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Cyber and Plan Security

12 Steps to Take Before and During a Data Breach

Employee benefit plans are attractive targets for hackers because they contain sensitive data, including health care information. The article outlines 12 steps to take before and during a data breach to ensure the best possible outcome for your employees and benefit plan participants as well as your organization as a whole.

Source: Ifebp.org

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Compliance and Regulatory

Dealing With Undocumented Workers In ERISA Plans

Dealing with such plan participation adds yet another layer of administrative difficulty and legal exposure for employers who hire employees not authorized to work in the U.S. ERISA does not exclude individuals otherwise qualifying as common law employees from plan rights and protections simply because of their immigration status. However, although the DOL has affirmed that other federal statutes, such as the FLSA, protect undocumented workers, it has conspicuously failed to formally state that ERISA does too.

Source: Benefitslawadvisor.com

IRS Extends Temporary Relief From the Physical Presence Requirement

The IRS announced that it is extending to the end of 2022 the temporary relief from the requirement that certain participant elections be witnessed in the physical presence of a plan representative or a notary public. In Notice 2022-27 the IRS says that due to the pandemic, it is extending the temporary relief provided in Notice 2021-40 from the requirement that certain participant elections be witnessed in the physical presence of a plan representative or a notary public, the physical presence requirement.

Source: Asppa.org

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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.