What Retirement Policies Should Your 401k Plan Have in Place
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In This Issue
Fiduciary and Plan Governance What Retirement Policies Should Your 401k Plan Have in Place Having clear policies and procedures for 401k plans helps employees involved in the plan administration do their job more efficiently by mapping out steps to take when various situations arise. ERISA and the DOL guidance recommend retirement plans maintain some of these policies and, while not required by law, are helpful in the event of a DOL audit or participant litigation. This article reviews what policies you should consider having and what they entail. Source: Consultrms.com Morningstar's Active/Passive Barometer: Takeaways for 401k Fiduciaries Morningstar's Active/Passive Barometer is a semiannual report that measures the performance of active funds against comparable passive funds. Over the years, the report has found that most active funds underperform their passive counterparts and that higher-cost funds are more likely to underperform. This article reviews what 401k fiduciaries can take from the report. Source: Employeefiduciary.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Four Trends to Watch in 2022 and Beyond Insights from the inaugural 2022 BlackRock "Read on Retirement" reveal a shifting landscape following over two years of market volatility, inflation, and a pandemic. The pandemic and recent market conditions understandably caused people to rethink their outlook on retirement and what they will need. It also inspired employers to offer more strategies to help employees save for the short and long-term. Here are four key findings from the survey that are trends to watch this year and beyond. Source: 401kspecialistmag.com Fidelity Q2 Analysis Shows Just How Hard Stock Losses Hit 401ks Given the stock market's dismal performance in the second quarter of 2022 -- and the first half of the year in general -- it's no surprise that average 401k account balances at plans record kept by Fidelity decreased significantly during the second quarter that ended June 30. Source: 401kspecialistmag.com Canadian Employers Embracing Innovation, Flexibility in DC Plan Design With inflation reaching its highest level in four decades and people facing several competing financial priorities, including simple day-to-day expenses, Canadian plan sponsors are bringing flexibility to their programs as they focus on catering to different needs and expanding the scope of their savings options. Source: Benefitscanada.com The Connection Between Emergency Savings Accounts and Retirement Plan sponsors can help drive higher retirement plan contributions from workers by offering robust emergency savings accounts that hew to their preferences, research from a pair of nonprofits shows. The research shows that for low- and moderate-income workers, access to emergency savings accounts is likely to bolster retirement contributions and provide greater financial security. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Proposed QPAM Amendment Would Expand Criminal Disqualification Rules In addition to the current list of offenses that disqualify a manager from acting as a QPAM, the amendment would codify the DOL's interpretation that foreign crimes substantially equivalent to the enumerated U.S. offenses result in disqualification. The amendment would add categories, short of actual crimes, permitting the DOL to strip a manager of QPAM status. The Amendment would also require QPAM management agreements to indemnify plan clients against losses resulting from the QPAM's disqualification, and impose a mandatory one-year winding down period following disqualification to help plans mitigate disruptions from changing advisors. Source: Debevoise.com Court and Legal Division of Fiduciary Duties Proves Key to Success in Stock-Drop Lawsuit On August 1, 2022, the United States Court of Appeals for the Seventh Circuit affirmed the lower court's dismissal of a "stock-drop" lawsuit against Boeing. The Seventh Circuit based its conclusion on the fact that an independent fiduciary, rather than the Boeing defendants, had exclusive fiduciary responsibility for the company stock fund and therefore had no duty to disclose corporate insider information to the participants or the independent fiduciary. Source: Groom.com Judge Slams Plaintiffs' Attorneys With $1.5 Million Judgement for "Reckless" Suit A federal judge has affirmed a $1.5 million judgment against Schlichter Bogard & Denton LLP and Schneider Wallace Cottrell Konecky LLP for their role in bringing a "reckless" excessive fee suit. Source: Napa-net.org More TDF Underperformance ERISA Lawsuits Filed This summer, plaintiffs represented by the increasingly active law firm Miller Shah LLP have filed a cluster of new ERISA lawsuits. The defendants in the cases include well-known national employers across the U.S., including Citigroup, Stanley Black & Decker, Booz Allen, Capital One, Wintrust, Cisco, and Genworth. The lawsuits all include nearly identical ERISA fiduciary breach allegations against the defendants, but these allegations stand in sharp contrast to the broader landscape of ERISA litigation. Source: Planadviser.com Seventh Circuit Issues Key Stock-Drop Decision in Boeing Max Case The 7th U.S. Circuit Court of Appeals in Chicago on August 1 upheld a lower court's dismissal of a case brought against Boeing in 2019 over the drop in Boeing's stock price. One expert attorney says the decision has particular importance to plan sponsors and fiduciaries who have employer stock as an investment. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Retirement Protection Act Proposed in House Representatives David Schwikert and Byron Donalds have introduced H.R. 8579, the Retirement Protection Act. The bill proposes modification of the saver's credit by replacing the three-tier formula with a single 50 percent credit percentage on contributions up to $2,000, with phase outs beginning at certain AGI thresholds. Source: Futureplan.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory A Beneficiary Form Is the Most Important Employee Benefit Form The most important form in all employee benefits is an individual employee's 401k plan beneficiary form. In the absence of a valid beneficiary form, 401k plan documents will often control the distribution of plan proceeds upon an employee's death. In other words, the distribution of large sums of money could potentially be against the deceased employee's wishes. The best way to avoid this issue is to make sure that an individual employee's 401k beneficiary form exists, is current, and matches any estate planning documents. Source: Masudafunai.com IRS Notice 2022-33 Provides a Partial Extension of the 2022 Plan Amendment Deadline The IRS has announced an extension of the deadlines for amending 401(a) qualified defined contribution and defined benefit plans, 403b plans, and governmental 457b plans. While the extension provides welcome relief in certain cases, some plan sponsors and Pre-Approved Plan Providers will still need to amend plans for certain CARES Act provisions and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 by the original amendment deadline, the last day of the 2022 plan year. Source: Asc-net.com Compliance Check: Amending Your 401k Plan Document on Time This article looks at the deadlines for a plan sponsor of an individually-designed 401k plan to adopt legally-required and discretionary 401k plan amendments, as well as recent IRS Notice 2022-33, which extended the deadline for certain legally-required 401k plan amendments related to the SECURE Act and the CARES Act. Source: Foley.com IRS Private Letter Ruling Addresses DB-to-DC Asset Transfer While it applies only to the immediate case, the IRS' approval of a transfer of excess assets from a terminating pension plan to three ongoing defined contribution plans is instructive for other taxpayers. Source: Planadviser.com »» Click here for more Compliance and Regulatory Material Marketplace News Lincoln Financial Teams With Stadion on Dynamic QDIA Solution
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