Crypto in 401k Plans: a Plaintiff Lawyer's Dream?
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In This Issue
Fiduciary and Plan Governance Crypto in 401k Plans: a Plaintiff Lawyer's Dream? The prospect of 401k plans adding cryptocurrency to their plan menu is like waiting for "fruit to ripen," according to a plaintiff's lawyer who spoke as part of a July 26 "Lessons from Litigation" panel at the 2022 NAPA D.C. Fly-In Forum. Attorney Mark Bokyo, a Partner with Bailey Glasser LLP, explained that anything which exposes participants to that level of risk, particularly when there's no real way to measure expected return moving forward, is not something that he would put in his plan. "I think the DOL's publicly stated position was carefully worded to just say, 'Hey, do your jobs if you're going to consider adding this.' The fact that participants want it is not a reason to do so any more than adding a lottery ticket fund would be," he noted. Source: Napa-net.org Due to the growing popularity of and attractive returns on cryptocurrencies, 401k participants are urging plan fiduciaries to permit these investments. However, crypto investment can be an unpredictable ride. Whether this volatility can be squared with fiduciary duties imposed by ERISA needed clarification. ERISA's fiduciary duties have been described as the "highest known to the law." Fiduciaries wrestle with related issues including: Should crypto be part of the core investment menu available to all plan participants? Do fiduciaries have an obligation to limit crypto investment even in a plan's self-directed brokerage option? Source: Fisherphillips.com Who Should Be Trustee of Your 401k Plan? When a company establishes a 401k plan it is necessary to name a trustee of the plan. This is a very important decision that is not always given the careful deliberation that it deserves. This article covers why it is such a crucial decision and outlines some of the options for naming a plan trustee. Source: Eforerisa.com How to Evaluate a Retirement Plan Recordkeeper Lawsuits and the threat of regulatory action mean plan sponsors must take special care in choosing a recordkeeper, the entity that manages and accounts for employee investments. Here are some best practices in choosing one and evaluating the incumbent provider. Source: Hubinternational.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Study Shows Workers Struggling Against Inflation to Save and Invest for Retirement Inflation is now the top obstacle to saving for a comfortable retirement, according to a new survey from Schwab Retirement Plan Services. The annual nationwide survey of 401k plan participants finds that workers rank inflation (45%) ahead of other obstacles including keeping up with monthly expenses (35%), stock market volatility (33%), and unexpected expenses (33%). Source: Businesswire.com Inflation is now the top obstacle to saving for a comfortable retirement, according to a new survey from Schwab Retirement Plan Services. The annual nationwide survey of 401k plan participants finds that workers rank inflation (45%) ahead of other obstacles including keeping up with monthly expenses (35%), stock market volatility (33%), and unexpected expenses (33%). Workers believe they'll need to save an average of $1.7 million for retirement, down from $1.9 million reported in last year's survey, and just under half (47%) feel they are very likely to reach their retirement savings goal. Source: Schwab.com Plan Sponsors Signal Concern About Underperformance The underperformance of plan investment options has heightened the anxiety level of defined contribution plan sponsors, according to a new report. The Cogent Syndicated Retirement Planscape report from Escalent reveals that the top concerns include employees not saving enough for retirement, fiduciary issues, and potential lawsuits. But these challenges create an opportunity for plan providers to offer support. Source: Napa-net.org Mega DC Plans Nudge Workers to Increase Savings The 50 largest defined contribution plan sponsors custodied by Northern Trust Asset Management have focused on getting workers to boost their retirement savings with automatic features, according to data from the firm. Plan sponsors are using auto-escalation to boost savings, but they are not focused on retirement income or decumulation options for plan participants. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers DOL Proposes Amendments to QPAM Exemption On July 27, 2022, the DOL proposed a set of amendments to Prohibited Transaction Class Exemption 84-14, the so-called "QPAM Exemption," which permits an investment fund holding assets of ERISA plans and IRAs that is managed by a QPAM to engage in transactions with parties in interest to those plans or IRAs, subject to certain conditions. Without an exemption, these transactions generally would be prohibited by ERISA and the Internal Revenue Code. The primary aim of the amendments is to tighten up the conditions which prevent QPAMs that have engaged in certain bad acts from being able to rely on the exemption and to establish procedures that apply when a QPAM is disqualified. However, several of the proposed amendments are unrelated to this aim and would make substantial changes to other aspects of the exemption. Source: Verrill-law.com 2021 Defined Contribution Consultant Research Study Recent years have presented unprecedented challenges, and the consulting and advisory community is evolving their businesses to address both obstacles and new opportunities. T. Rowe Price, in partnership with Schaus Group, shares insights on retirement trends from their latest survey of the nation's 32 leading consulting and advisory firms that provide services to more than 33,000 plan sponsor clients and report nearly $7.2T of assets under advisement. Source: Troweprice.com Court and Legal Sixth Circuit Tosses ERISA Fiduciary Breach Claims On June 21, 2022, CommonSpirit Health defeated a putative class action brought by former employees who alleged that the company mismanaged their 401k plan by offering higher-cost, actively managed investment options when lower-cost index funds with better returns were available. The plaintiffs also alleged that the plan's recordkeeping and investment management fees were excessive when compared to industry averages. Source: Erisalitigationadvisor.com Sixth Circuit Holds That Retail vs. Institutional Share Class Claim Cannot Be Dismissed on Motion This article discusses a July 22, 2022, decision by the Sixth Circuit, in favor of the plaintiffs and denying the defendant's motion to dismiss, holding that a claim based on the use of a retail share class, rather than a less-expensive institutional share class, was sufficient to survive a motion to dismiss. Source: Octoberthree.com »» Click here for more Court and Other Legal Issues State-Based Private-Sector Retirement Programs State Auto-IRAs Continue to Complement Private Market for Retirement Plans Pew did an initial examination of data from the annual filings by employer-sponsored plans from 2013 to 2019 to the Department of Labor. The analysis suggested that, in those states that have created auto-IRA programs, employers with plans continue to offer them, and businesses without plans are adopting new ones at rates similar to before the state options were available. Updated data for 2020 show comparable results, despite the impact of COVID-19 on the economy more broadly. Source: Pewtrusts.org Hawaii to Establish Unique Retirement Program Hawaii has joined the states that provide retirement plan coverage for private-sector employees whose employers do not offer one, and with a twist. Gov. David Ige signed legislation creating the program into law on July 12. It went into effect immediately. Source: Asppa.org Compliance and Regulatory Great 401k Participant Features That Can Cause You Headaches Within a 401k Plan, some options are truly beneficial to plan participants when it comes to increasing retirement savings or allowing access for a participant's benefit. The problem with these options is that if you and your plan provider don't keep an eye on them, there may be a compliance headache coming your way. Source: Jdsupra.com SECURE 2.0 Retirement Reform: Focus on DC Plan Provisions SECURE 2.0, shorthand for three bills that would have significant implications for retirement plans, continues to work its slow but steady path through Congress. It now appears that SECURE 2.0 will be enacted late this year. Plan sponsors should be aware of the many changes included in this pending legislation. This article addresses the most significant provisions that would affect midsize and large DC plans. Source: Segalco.com »» Click here for more Compliance and Regulatory Material Marketplace News Fidelity's "Bitcoin-in-401ks" Plan Moving Forward
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