Cybersecurity Breach Suits Raise Questions About Liability for Benefits Plans
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Cyber and Plan Security Cybersecurity Breach Suits Raise Questions About Liability for Benefits Plans Cybersecurity breaches concerning workers' personal information and retirement savings have increased liability risks for benefit plans and third-party administrators under federal benefits laws. In February 2021, the GAO issued a report warning about these increased legal risks for ERISA plan fiduciaries due to cyber breaches. The GAO also warned that outsourcing various functions involving retirement plans to third-party administrators could increase the potential for unauthorized access to participants' information. In recent years, the GAO's warnings have become a reality. Source: Hallbenefitslaw.com Is It Time for ERISA to Be Amended to Cover Cyber Crimes? It is no surprise that cyberattacks are a grave concern for sponsors of retirement plans. Under ERISA fiduciaries and persons handling funds must be bonded to protect against fraud and dishonesty. This article discusses this required ERISA bond and the interplay of other types of insurance coverage and concludes with a recommendation that Congress amend ERISA to require insurance to address cyber crimes. Source: Foxrothschild.com Common Myths of Cyber Insurance for Employee Benefit Plans Cyber insurance is a critical component of the cyber security risk management program necessary to protect employee benefit plans and participant retirement assets. But the current way plan fiduciaries seek cyber and crime coverage needs to change and this article explains why. Source: Euclidspecialty.com »» Click here for more on Cybersecurity Issues Insight: Studies, Research, and White Papers Financial Challenges Prevent Saving for Retirement Many U.S. workers must grapple with a "financial vortex" of challenges blunting their retirement savings, research shows. The Goldman Sachs Asset Management Retirement Survey and Report find that every generation of respondents -- Gen Z, Millennials, Gen X, and Baby Boomers -- face significant effects, from competing financial priorities to life events, that distract from the ability of many to save for retirement. Source: Planadviser.com Canada's Retirement System Remains Strong, but DC Pension Plans Facing Inflation Risks: Report While Canada's pension system continues to rank well globally, the current economic environment poses particular risks for defined contribution pension plan sponsors and members, according to a new report by the CFA Institute and Mercer. Source: Benefitscanada.com Four Generations of Workers Are Preparing for Retirement Amid an Uncertain Future Seventy-six percent of workers say their life priorities changed as a result of the pandemic and 56 percent cite saving for retirement as a financial priority, according to Emerging From the COVID-19 Pandemic: Four Generations Prepare for Retirement, a survey report released by the nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute. Source: Transamericainstitute.org Mintz Of Counsel Michelle Capezza authored this chapter in New York University's Review of Employee Benefits and Executive Compensation examining some of the ways that employers can provide their employees with meaningful access to retirement savings plans to address retirement savings gaps. Source: Mintz.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers DOL Regulations Expand Liability for Financial Advisors Giving Pension Rollover Advice The DOL began fully enforcing its Prohibited Transaction Exemption 2020-02 as of July 1, 2022. These regulations apply to and expand liability for financial advisors giving clients pension rollover advice. Some aspects of the rule were already in effect. Still, advisors must now provide clients with a mandatory written explanation of why the investment professional or financial institution believes the rollover is in the client's best interest. Financial institutions must adopt policies and procedures to ensure compliance with the Impartial Conduct Standards and mitigate conflicts of interest. Source: Hallbenefitslaw.com ERISA Industry Committee Comments in Opposition to New DOL QPAM Rule The ERISA Industry Committee submitted a comment letter in opposition to a proposed Department of Labor rule that would change the way qualified professional asset managers are regulated. The new rule is opposed by industry participants due to the new ways in which QPAMs can be disqualified, the onerous new contract agreements, and the inadequate transition and winding down periods. Source: Planadviser.com Court and Legal ERISA Suit Brought Against Quanta Services Two former employees of Quanta Services in late September brought a class action suit against the company under the Employee Retirement Income Security Act, alleging that Quanta had maintained underperforming and expensive investment options in its sponsored retirement plan. Quanta Services, an electrical power company, sponsored a retirement plan that covered 16,317 participants, with $1.21 billion in assets as of December 21, 2020, according to the lawsuit. Source: Planadviser.com Two More District Courts Reject ERISA Fee and Performance Claims as Insufficient Two recent district court decisions add to the growing number of courts granting motions to dismiss putative ERISA class actions challenging defined contribution plan fees and investment performance. These decisions from the Eastern District of New York and the Eastern District of Wisconsin are the latest victories for defendants at the motion to dismiss stage in this arena and come on the heels of multiple similar decisions in the Sixth and Seventh Circuits. Source: Erisapracticecenter.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory IRS Extends Helpful RMD Rule Transition Relief In recognition that RMDs may not have been made in 2022 in compliance with the Proposed Rule, or in 2021 consistent with what the IRS would consider a good faith interpretation of the SECURE Act, the IRS issued Notice 2022-53 to provide transition relief for 2021 and 2022. Additionally, Notice 2022-53 states that the final RMD rule will not apply to RMDs any earlier than 2023. Source: Icemiller.com IRS Extends Deadline to Amend Plans for Additional Cares Act, CAA Disaster Relief Provisions On September 26, 2022, the IRS issued Notice 2022-45 which extends the deadline for amending retirement plans, including 401k plans, to comply with recent legislation. The applicable legislative provisions, which have now expired, were enacted as part of a wider effort to provide temporary relief in response to the global COVID-19 pandemic, and generally require plan documents to be amended, as further explained below. Source: Compliancedashboard.net IRS Extends More Retirement Plan Amendment Deadlines The IRS announced on September 26, 2022, that it would extend the deadline for amending retirement plans or IRAs to reflect coronavirus-related distributions and certain qualified disaster distributions. Notice 2022-45 extends the deadline by three years, generally to December 31, 2025. The deadline extension also applies to retirement plans that allowed expanded participant plan loans during 2020. Source: Bdo.com IRS Issues Update on Required Minimum Distribution Rule The IRS has issued Notice 2022-53, providing guidance on final regulations related to required minimum distributions under section 401(a)(9) of the Internal Revenue Code that will apply no earlier than the 2023 distribution calendar year. The notice also provides guidance related to certain provisions of section 401(a)(9) that apply for 2021 and 2022. Source: Planadviser.com »» Click here for more Compliance and Regulatory Material Marketplace News Bitwage, ForUsAll Partner on One-Stop-Shop for Crypto 401k and Payroll Transamerica Offering Year-End Incentives to Attract Small-Biz Plans Retirement Summit Convenes Thought Leaders With a View to Strengthen American Retirement System
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