Newsletter for May 31, 2022
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In This Issue
Fiduciary and Plan Governance
Understanding the Impact of Russian Sanctions on Retirement Plans
As part of their oversight responsibilities over plan investments, retirement plan fiduciaries should discuss the impact of sanctions on the plan and its investment portfolio with their service providers. Institutional service providers have likely already considered this issue and taken appropriate steps to ensure compliance with sanctions, but plan fiduciaries should understand these measures as part of a prudent monitoring process. Plan fiduciaries may consider asking the questions noted here.
Source: Kilpatricktownsend.com
Retirement Plan Correction Solution: The Absentee Fiduciary
Eleanor has operated her fledgling business, The Good Place, for about seven years. She established a 401k plan somewhere around year two at the recommendation of her CPA. The CPA set up the plan for her with a bundled service provider. Whatever the CPA put on the paperwork (without ever discussing it with Eleanor), was how the Plan was established and how it remains. Relying on her payroll manager to just keep the contributions flowing, Eleanor was very pleased with herself. But, the Good Place gets randomly chosen by the DOL for a fun-filled investigation. In reading over the DOL letter from the investigator, Eleanor is baffled by half of the requested items and calls her CPA.
Source: Ferenczylaw.com
Is the Traditional Fiduciary Insurance Model at Risk?
One legal professional at a fiduciary insurance firm argues that the "indiscriminate nature" of recent ERISA lawsuit filings could eventually culminate in a crisis for the retirement plan industry's current approach to risk management and fiduciary insurance.
Source: Planadviser.com
Regulatory Monitor: Department of Labor Update
In this article, Groom Principal David Kaleda explains the significance and contents of the "Supplemental Statement on Private Equity in Defined Contribution Plan Designated Investment Alternatives" issued by the DOL in December, including the Department's position concerning such investment alternatives, and its emphasis on several important fiduciary principles discussed in the Information Letter.
Source: Groom.com
»» Click here for more Fiduciary and Plan Governance Material
Insight: Studies, Research, and White Papers
Understanding the New Defined Contribution Landscape
In its 16th year, the PIMCO US Defined Contribution Consulting Study seeks to help consultants, advisors, and plan sponsors understand the breadth of views and consulting services available within the defined contribution marketplace.
Source: Pimco.com
401k Plans Want More Personalized Retirement Solutions
Personalized solutions reportedly are becoming more attractive for plan sponsors who are encouraging those saving for retirement to remain with their 401k provider after they leave the workforce. That's according to PIMCO's 16th Annual Defined Contribution Consulting Study, which surveyed 36 consultants and advisory firms that serve more than 37,000 clients with $6.9 trillion in total assets in DC plans.
Source: Napa-net.org
401k Loan Protection Helps Address Leakage. How it Works
Retirement plan leakage has been a pressing issue for policymakers and practitioners for several years. A report issued to the Senate Special Committee on Aging by the GAO in 2021 showed plan participants ages 25 to 55 withdrew $9.8 billion from retirement plans without rolling the account over into another qualified plan or individual retirement account. However, the most significant element of this leakage, by far arises from plan loans that default upon the termination of the participant's employment.
Source: Businessofbenefits.com
Study Finds Plan Advisors Integral to Retirement Plan Participation and Outcomes
Morgan Stanley released new research from its inaugural workplace retirement study that shows plan sponsors see a positive impact and value in having a plan advisor oversee their workplace retirement plan to boost retirement plan participation and outcomes.
Source: Businesswire.com
2022 Investment Company Fact Book
This year's ICI Fact Book offers a wealth of information on our industry, with nearly 70 data tables providing a long history of the number and types of mutual funds, ETFs, closed-end funds, and unit investment trusts; their assets and flows; and a wide array of other statistics, many of which are broken down by the fund's investment objective and other fund categories. You will also find detailed discussions of recent industry trends, both in the United States and around the globe.
Source: Ici.org
»» Click here for More Studies, Research, and White Papers
Court and Legal
DENSO International America Faces Multi-Pronged ERISA Suit
Plaintiffs have filed a new Employee Retirement Income Security Act lawsuit in the U.S. District Court for the Eastern District of Michigan against DENSO International America Inc., the U.S. division of the global manufacturer of automotive components and technologies. The complaint includes not just allegations of excessive fees, but also a charge that fiduciaries offered an underperforming stable value fund.
Source: Planadviser.com
Sixth Circuit Finds Participants Don't Have to Arbitrate Excessive Fee Claims
A DC plan sponsor can't require participants to resolve their ERISA excessive fee claims through binding arbitration, despite arbitration provisions in the participants' employment agreements, the 6th US Circuit Court of Appeals recently ruled. The court found that the participants brought these fiduciary breach claims not as individuals but as representatives of the plan, which didn't include an arbitration provision and hadn't otherwise agreed to arbitrate.
Source: Mercer.com
»» Click here for more Court and Other Legal Issues
Legislative and Washington DC
New Retirement Bill Amending ERISA Introduced in Congress
Plan sponsors could be making more trips to court for retirement plan fiduciary breach claims instead of settling through arbitration, under a proposed bill. Representative Mark DeSaulnier and Senator Tina Smith have introduced the Employee and Retiree Access to Justice Act, which seeks to prohibit arbitration of claims challenging the administration and fiduciary management of benefit plans regulated under the ERISA.
Source: Plansponsor.com
Legislation to Strengthen Retirement and Emergency Savings Introduced
The flurry of retirement and savings-related legislation continued Thursday with the release of a draft bill designed to "strengthen people's emergency savings and retirement security." Senate Health, Education, Labor, and Pensions Committee Chair Senator Patty Murray and Ranking Member Senator Richard Burr released the draft of the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act.
Source: 401kspecialistmag.com
»» Click here for more on Legislative and Washington Actions
Compliance and Regulatory
IRS Addresses Impact of Missing a Pre-Approved Plan Restatement Deadline
The IRS in a May 23 edition of Employee Plan News provides a comprehensive discussion of the impact of missing a deadline for restating a pre-approved 401(a) or 403(b) plan and how such a situation can be handled. To maintain a plan's status as a pre-approved plan and retain uninterrupted reliance on its opinion letter, an employer must adopt each applicable cycle's restatement by the due date for that cycle, the IRS reminds.
Source: Asppa.org
Final Form 5500 Revisions Guidance Issued
This guidance focuses primarily on defined benefit reporting changes affecting Schedule MB Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information, Schedule SB Single-Employer Defined Benefit Plan Actuarial Information, and Schedule R Retirement Plan Information. Additionally, the final revisions add plan characteristic codes reported on Form 5500 and Form 5500-SF by sponsors of multiple employer plans, to indicate the type of MEP arrangement.
Source: Futureplan.com
IRS Extends Relief From Physical Presence Requirement
The IRS released Notice 2022-27, granting a six-month extension to the temporary relief from the "physical presence requirement" for tax-qualified retirement plans, including 401k plans, that was previously announced in June 2021. The Notice extends the relief -- originally scheduled to expire on June 30, 2022 -- by an additional six months, through December 31, 2022.
Source: Compliancedashboard.net
»» Click here for more Compliance and Regulatory Material
Marketplace News
Empower Teams With Rockefeller to Create Turnkey Retirement Plan
Putnam Creates Suite of Sustainable TDFs
401k Plans Given the Best in Class Designation
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