Low-Cost Index Funds in the Crosshairs of New 401k Lawsuits
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In This Issue
Court and Legal Low-Cost Index Funds in the Crosshairs of New 401k Lawsuits A series of new lawsuits demonstrate that plan fiduciaries' selection of any fund may be at risk for fiduciary breach claims, having a robust system of plan governance in place can make a company's 401k plan a less attractive target for plaintiffs' lawyers and provides necessary defenses should litigation arise. It is also very likely that compliance with ERISA Section 404(c) will be an important defense in these cases. Source: Hklaw.com Arbitration of ERISA Claims Under the Microscope: Where are the Courts and Congress Headed? We still have no final word from the courts on the enforceability of ERISA mandatory arbitration provisions, but plan sponsors can increase the chances that their mandatory arbitration policies will be upheld by reviewing the reasoning in recent cases. That's assuming that Congress doesn't act. Source: Cohenbuckmann.com Plaintiffs Say 401k Plan Omitted Target-Date Funds Among Problems The plaintiffs claim that the defendants "flagrantly" breached fiduciary duties owed to the plan and plan participants by mismanaging the plan's recordkeeping fees and investment options. In addition, the plaintiffs claim in the complaint that the TTEC 401k plan was administered during the class period without "crucial" protocol, namely, an investment policy statement, and did not include target-date funds in the plan's investment menu until "late" 2019 when five Vanguard options were added. Source: Planadviser.com District Court Rejects Cross-Selling Claims in Mixed ERISA Ruling Much of the ruling sides with plaintiffs and permits the case to move to discovery, but the defendants successfully defeat claims related to cross-selling and data-sharing among providers. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Fiduciary and Plan Governance Achieving Fiduciary Excellence More advisory firms are seeking to differentiate themselves and grow AUM by formalizing their commitment to fiduciary excellence. 139 investment advisory firms from around the world have done just that, achieving certification by the Centre for Fiduciary Excellence, the gold standard for signifying adherence to fiduciary best practices. This report provides an inside look at how those advisory firms operate their practices. Source: Broadridge.com M&A Could Be the Next Challenge for Plan Sponsors: Are You Ready? Auto parts maker GKN North America Services Inc. managed to fend off some, but not all, claims in an excessive fee suit involving its use of Prudential's GoalMaker product. Source: Orba.com Comparing Seven Defined Contribution Plan Designs - 2022 In designing a retirement plan, you look at the employer's objectives, the need for flexibility, the ages of the key personnel, the salaries of everyone involved, total budgeted dollars, the advantages of adding 401k features, etc. This chart shows the results of an analysis prepared for one company that wanted a defined contribution plan. There were 10 people eligible for the retirement plan, including one owner. Source: Consultrms.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers 401k Balances Reflect Volatile Period for Markets According to Charles Schwab's SDBA Indicators Report, a benchmark on retirement plan participant investment activity within self-directed brokerage accounts, the average account balance across all participant accounts finished at $283,485 for the second quarter ending June 30, a 19% decrease year-over-year and a 15% decrease from the first quarter of 2022. Source: Planadviser.com Factors Contributing to Lower Retirement Confidence Among Women Who Are Not Married Americans have near-record-high confidence in having enough money to live comfortably throughout retirement. However, unmarried women workers and retirees have lower retirement confidence than their married counterparts and are more likely to have lower incomes and assets. This 37-page report examines the attitudes, considerations, and behaviors surrounding the retirement of women workers and retirees of different marital statuses to provide greater insight into what can help improve women's retirement outcomes. Source: Ebri.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers How Advisors Can Help Clients Invest Sustainably Outside of 401ks This article is part of a series providing a framework for incorporating sustainable investing into your advisory practice. A previous article explored the limitations and opportunities of investing sustainably within employer-sponsored retirement plans such as 401ks. Advisors supporting clients in investing sustainably outside of these accounts may find more choice but also more complexity. Source: Morningstar.com How Retirement Plan Advisors Can Lose Clients in a Flash Building a book of retirement plan clients is tough work. Clients don't fall from trees and it can take months or years to land that potential client you have visited and called countless times. And it is easier to lose a client than it is to gain one. If you follow some of the steps outlined here, you can avoid losing your retirement plan clients. Source: Jdsupra.com Legislative and Washington DC Feds Poised to Implement Four Policy Changes Affecting ERISA Plans Before End of 2022 The Biden administration plans to introduce various rules before the end of 2022 that will impact ERISA-regulated benefits plans. Meanwhile, Congress is working to smooth out differences between the Senate and House on a broad retirement policy omnibus bill. Here is a review. Source: Hallbenefitslaw.com Top 401k Priorities on the DOL's Regulatory Agenda On June 21, 2022, the DOL published its Spring 2022 Regulatory Agenda which lists all the regulations the DOL expects to have under active consideration, including 401k reform items. You should check them out to understand the DOL's 401k-related priorities for the next 12 months. Here are the three 401k-related priorities that the author is most excited about. Source: Employeefiduciary.com »» Click here for more on Legislative and Washington Actions State-Based Private-Sector Retirement Programs CalSavers to Cover Nearly all Employees in California CalSavers, the state-run program that provides retirement plan coverage to private-sector employees whose employers do not, will cover nearly all such employees in the Golden State. Gov. Gavin Newsom on Aug. 26 signed legislation further expanding the program. Source: Ntsa-net.org Compliance and Regulatory DOL Updates Guidance on Audit Independence Rules The DOL has issued new guidance for retirement plan fiduciaries, Interpretive Bulletin 2022-01, that addresses the rules about audit independence that apply to retirement plans governed by ERISA. Source: Planadviser.com DOL Releases New Bulletin on Independence for Plan Accountants How independent do accountants have to be when auditing plan documents? The DOL just got more specific. Interpretive Bulletin 2022-01 revises and restates the 1975 Interpretive Bulletin to remove certain outdated and unnecessarily restrictive provisions and reorganize other provisions for clarity. Source: 401kspecialistmag.com »» Click here for more Compliance and Regulatory Material Marketplace News RPA Teams with Stadion and EPIC to Boost Participant Advice Solutions Goldman Sachs Closes Deal for Retirement Platform NextCapital
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