Is It a Breach of Fiduciary Duty to Include Target-Date Funds in 401k Plans?
|
Newsletter Sponsor Still Need 401k Data for Your IRA Rollover Recommendation Disclosures? The 401k Averages Book offers low-cost licensing for you to incorporate our fee data into your best interest or 401k to IRA rollover recommendation disclosures. The 401k Averages Book is still the most recognized resource book for comparative, non-biased 401k average cost information. Click here for more information. In This Issue
Target-Date Funds Is It a Breach of Fiduciary Duty to Include Target-Date Funds in 401k Plans? One of the themes of many excessive fee suits is that the inclusion of particular products in plans is, in and of itself, evidence of a fiduciary breach, when the real question in such a suit, even if a product was overpriced, should be whether it was imprudent for the fiduciary to have included that product. As the cliche goes, you get what you pay for, and a plan fiduciary's job is to assemble a prudent collection of investment options, not just assemble the cheapest one possible. Source: Bostonerisalaw.com Target-Date Funds and the Ever-Evolving Glidepath In 2021 and the first half of 2022, multiple TDF providers announced changes to their strategic target-date fund glidepaths. The timing of these changes was unique, as capital markets adjusted to a post-pandemic world and a vastly different global outlook. To better understand the nature and extent of these changes, Callan leveraged the data that they gather for their proprietary TDF analytics, which allows them to track broad TDF asset allocation trends. Source: Callan.com »» Click here for more on Target-Date Funds Fiduciary and Plan Governance Debate: Is Defaulting 401k Participants Into Annuities in Their Best Interest? One provision in the Setting Every Community Up for Retirement Enhancement Act provides extra assurance and protection to retirement plan sponsors that follow certain rules to select annuities as in-plan offerings. Two professors with opposing political viewpoints share their opinions about whether retirement plans should default 401k participants into annuity options. Source: Thinkadvisor.com Five Bad Fiduciary Assumptions, Podcast You know that old saying that when you assume... well, that applies double (and then some) to ERISA plan fiduciaries. In this podcast, Nevin Adams and Fred Reish discuss five bad assumptions with reminders about how to avoid winding up in trouble. Source: Napa-net.org DOL Proposal May Disrupt Plan Sponsors' Investment Arrangement The DOL recently proposed significant changes to a key ERISA prohibited transaction exemption widely used by asset managers for nearly four decades. The exemption allows qualified professional asset managers to engage in many routine transactions that ERISA would otherwise prohibit. A separate provision clarifying that the exemption applies only to investment decisions that are the QPAM's sole responsibility might limit the investment opportunities available to plans. Source: Mercer.com Retirement Plan Fiduciary Mistake: Focusing Solely on Past Investment Performance Fiduciaries are not responsible for delivering the absolute best investment performance. They are responsible for following a prudent decision-making process that is reasonable and well-documented, and for making decisions with the best interest of participants in mind. Focusing primarily or solely on past investment returns could result in several fiduciary mistakes noted here. Source: Conradsiegel.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Retirement Savers Continue Saving Despite Down Market in First Half of 2022 Retirement saving continued to be a strong focus for defined contribution plan participants through the first half of 2022, ICI research demonstrates. ICI's study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 40 million employer-based DC retirement plan participant accounts at the end of June 2022. Source: Ici.org DC Plans Slow to Adopt ESG Options Many plan sponsors remain hesitant to implement environmental, social, and governance investing until the Department of Labor rules on the subject. Most of the ESG implementation so far has occurred in plans at organizations whose purpose naturally aligns with ESG factors. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Cerulli Sees Increased Recordkeeper, Advisor "Coopetition" Will "coopetition" between recordkeepers and plan advisors increase in the coming year? Boston-based research and consulting firm Cerulli Associates says yes, and the two parties will work together to serve the plan but simultaneously compete for participant rollovers. Source: 401kspecialistmag.com Court and Legal ERISA Litigation: Seventh Circuit Confirms DOL's Broad Subpoena Power In Walsh v. Alight Solutions, LLC, the Seventh Circuit affirmed a district court order requiring Alight Solutions to produce documents in response to a DOL subpoena, confirming that the DOL has broad authority to issue subpoenas to investigate possible ERISA violations, even against non-fiduciaries. Source: Faegredrinker.com Three Defendants Move to Dismiss Cybersecurity ERISA Suit The Colgate-Palmolive employee relations committee, plan recordkeeper Alight Solutions, and custodian Bank of New York Mellon Corporation have all filed to dismiss an ERISA lawsuit brought by Paula Disberry, an employee of Colgate-Palmolive from 1993 to 2004. The defendants are accused of ignoring several red flags, resulting in over $750,000 being stolen from a retirement account. Source: Planadviser.com Cruise Line Docked with Excessive Fee Suit The plan size is somewhat smaller, and the plaintiff's law firm is relatively unknown in these matters, but the claims are familiar. The suit claimed that based on reasonable inferences from the facts set forth in this complaint, during the Class Period Defendants failed to have a proper system of review in place to ensure that participants in the plan were being charged appropriate and reasonable fees for each of the plan's investment options. Source: Napa-net.org Wake Forest University Retirement Plan Lawsuit Will Proceed A federal judge has allowed an ERISA lawsuit to proceed. Defendants previously alleged that the 403b university plan was mismanaged by plan fiduciaries because it was filled with excessive-fee investments, that the plan fiduciaries misused revenue sharing to pay for administrative expenses, and that they failed to conduct periodic bids to the market to ensure that the recordkeeping and administrative costs remained competitive. Source: Plansponsor.com Seventh Circuit Affirms Dismissal of Excessive Fee Claims The Seventh Circuit has affirmed a trial court's dismissal of a participant's ERISA fiduciary claims against a 401k plan. The trial court dismissed the suit, observing that the participant had failed to allege that the fees were excessive in relation to the services provided or that a lower-cost alternative would have provided comparable services. Source: Thomsonreuters.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory What Qualifies as an "Immediate and Heavy Financial Need" Under Hardship Withdrawal Rules? Do specialists have a list of the types of expenses for which distributions are deemed to be made on account of an immediate and heavy financial need from a 401k/ 403b plan under the hardship withdrawal rules? Experts from Groom Law Group and CAPTRUST answer the question. Source: Plansponsor.com Amending Your Retirement Plans This Year for SECURE Act and CARES Act Changes While many commentators and employee benefits publications have cheered the three-year extension, the article authors are of the view that plan sponsors will be best served by amending their plans this year to incorporate provisions of the SECURE Act, the Miners Act, and the CARES Act that they have been applying in operation. Source: Verrill-law.com »» Click here for more Compliance and Regulatory Material Marketplace News New 401k Solution Geared Toward Latinos Working in Small Businesses American Century Offers Tool to Retirement Plan Fiduciaries Equitable Launches New Turnkey 401k Program for Small Businesses
This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted. Articles are copyrighted to their publishers. If you believe that your work has been copied in a way that constitutes copyright infringement, please contact the source site immediately. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services, or products found on websites linked hereto. All links were tested before this eNewsletter was e-mailed to you to ensure that they are still functional, but publishers do move or delete articles. Therefore, we can't guarantee that the links provided will remain operational. 401khelpcenter.com does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Opinions expressed are those of the author of the article and do not necessarily reflect the positions of 401khelpcenter.com. THIS NEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT, TAX, ACCOUNTING, OR LEGAL ADVICE. Copyright © 2022 by 401khelpcenter.com, LLC. All rights reserved. No reproductions without prior authorization, but you are free to email this copy (in its entirety) along to colleagues or clients. This newsletter may not be posted on any website. 401khelpcenter.com, LLC
|
