Five Dangerous Fiduciary Assumptions
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In This Issue
Fiduciary and Plan Governance Five Dangerous Fiduciary Assumptions There's an old saying that when you assume... well, here are some assumptions that can create real headaches for retirement plan fiduciaries. Source: Napa-net.org What You Need to Know About Retirement Plan Committees Being a retirement plan sponsor can be a bit overwhelming, but a retirement plan committee can be an effective method of managing a retirement plan. Like any tool, a plan committee must be used correctly. This article is about how a plan sponsor can delegate to their retirement plan committee and some of the things they should avoid. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Nearly Half of Plan Sponsors Considering Changing Advisors, Recordkeepers Competition amongst plan advisors and recordkeepers is reaching an all-time high, with 47% of plan sponsors considering a new advisor and 48% considering a change of recordkeepers for their 401k plans. This is according to the 13th edition of Fidelity Investments' Plan Sponsor Attitudes Study, released today, which found that in 2022 plan sponsors are the most active in years in making big changes to their retirement plans. Source: 401kspecialistmag.com Plan Sponsor Activity and Engagement Set to Heighten: Study Fidelity Investments announced the results of the 13th edition of its Plan Sponsor Attitudes Study. The study characterizes 2022 as a year of change for the retirement plan industry with plan activity and competition amongst plan advisors hitting multiyear highs. Source: Businesswire.com Emergency Savings = Better Retirement? Of all the statistics about financial anxiety, one of the most alarming is that 36% of Americans in 2020 reported that they would be unable to meet an unexpected $400 expense without borrowing or selling a personal item. Alarming, yes but what does that have to do with retirement? A great deal. There are two ways a financial emergency can undermine retirement and why plan sponsors may want to consider taking action. The first is the direct damage that emergency withdrawals or loans can do to retirement savings. The second is more subtle. Source: Blackrock.com How Gloomy Is the Retirement Outlook for Millennials? Social, economic, demographic, and public policy shifts have made Millennial retirement security a pressing concern. Many recent trends threaten financial security for future generations of retirees. Male labor force participation pre-age 55 has slumped, men's median earnings have stagnated, marriage and homeownership rates are falling, debt levels remain high, and out-of-pocket spending on medical and long-term services and supports are rising. Other trends are more encouraging, such as women's higher earnings, the rise in labor force participation at older ages, and improvements in educational attainment. Source: Upenn.edu Dated Thinking May Be Holding Back Annuities Annuities deserve a fresh look from plan sponsors, according to retirement industry veterans with years of experience in retirement income strategies. Despite product innovations and improvements, the perception of annuities among many plan sponsors is stuck in the past, says Rona Guymon, senior vice president of annuity distribution, at Nationwide Financial. The persistence of myths and misunderstandings about annuities are likely holding back greater adoption, she adds. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Court and Legal Schlichter Slammed (Again) in Empower's Win "Having already limited Defendants' total recovery to fees and expenses after the start of trial and having further restricted that recovery to no more than $ 1.5 million, the Court finds no basis to further reduce the fee award." And with that, the United States District Court in Colorado affirmed the judgment against high-profile attorney Jerry Schlichter for $1.5 million for "reckless" fiduciary claims. Source: 401kspecialistmag.com Appellate Court Backs DOL in Cybersecurity Subpoena A federal appellate court says that the Labor Department is allowed to pursue its inquiry into the cybersecurity practices at a large recordkeeper. Source: Asppa.org Second Circuit: Participant's 401k Plan Accounts Were Subject to Garnishment In a dispute involving garnishment of funds in 401k plan accounts, the Court of Appeals for the Second Circuit held that the participant's accounts were subject to garnishment to enforce a restitution order resulting from the participant's criminal convictions. Source: Westlaw.com CUNA's 401k Latest Targeted in BlackRock TDF Suit The law firm of Miller Shah LLP has targeted another plan they claim "appear[s] to have chased the low fees charged by the BlackRock TDFs without any consideration of their ability to generate return." This time it's the fiduciaries of the $865 million CUNA Mutual 401k Plan for Non-Represented Employees. Source: Napa-net.org Participant Data Claims Dismissed in Excessive Fee Suit ADP got something of a split decision in an excessive fee case with a federal judge allowing claims regarding high record-keeping fees and expensive investments to proceed but culling claims about the use of participant data. The suit was filed in mid-May 2020 in the U.S. District Court of the District of New Jersey against the fiduciaries of the $4.4 billion ADP TotalSource Retirement Savings Plan (including third-party investment consultant NFP Retirement) on behalf of participants in the MEP. Source: Napa-net.org »» Click here for more Court and Other Legal Issues State-Based Private-Sector Retirement Programs OregonSaves Has "Meaningfully Increased Employee Savings" A new study finds that OregonSaves -- launched in 2017 as the first state-sponsored retirement plan -- has "meaningfully increased employee savings," and employees opting out of the program "are often doing so for rational reasons." The study, funded by the U.S. Social Security Administration and conducted by the Michigan Retirement and Disability Research Center, analyzes participation choices, account balances, and inflow/outflow data between August 2018 and April 2020 for OregonSaves. Source: 401kspecialistmag.com Compliance and Regulatory DOL Cybersecurity Investigations: The Trap Door to Endless Document Requests? Parties involved in a DOL investigation often ask a simple question: how much information am I obligated to provide the DOL in response to an administrative subpoena? A recent decision, in the United States Court of Appeals for the Seventh Circuit, Walsh v. Alight Solutions, LLC, provides some guidance. Source: Groom.com Avoiding Improper Retirement Plan Distributions One of the challenges of administering a retirement plan is the timely and proper payment of distributions to plan participants. This responsibility occurs in more than one context and can have several "facts and circumstances" variations. Source: Penchecks.com Maintaining Records: Who Does What, and When? Retaining and maintaining records is not a minor matter, ERISA and DOL regulations make that clear. And yet, says a plan administrator, policies concerning record retention and maintenance are not as common as one may expect. Source: Asppa.org »» Click here for more Compliance and Regulatory Material Marketplace News Registration Is Open for the 2023 NTSA Summit Announcing Nominees for the NAPA 2022 Top Women Advisors
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