How Can Fiduciaries Serve Safely in Their Highly Regulated Role?
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In This Issue
Fiduciary and Plan Governance How Can Fiduciaries Serve Safely in Their Highly Regulated Role? The DOL has called for increased training for people who occupy the primary position of trust for employer-sponsored retirement plans. While a good heart is a desirable trait in fiduciaries, the DOL stresses the vital role that knowledge plays for executives and managers who typically lack academic or formal education in the prudence principles that dictate fiduciary conduct under ERISA. Source: Rolandcriss.com Is Cryptocurrency Too Risky for 401k Plans? The Controversy Continues Regardless of whether the DOL prevails against ForUsAll in the pending lawsuit, cryptocurrency is here to stay. Industry participants can help the DOL develop a more nuanced position about cryptocurrency that takes these differences into account if they are given the opportunity. Source: Cohenbuckmann.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Against a backdrop of rising inflation and global instability, many employees are feeling the pressure of meeting their day-to-day financial needs. That sentiment was evident in the 2022 PLANSPONSOR Participant Survey. This year, 2,301 American workers responded to questions about their financial behaviors, preferences, and attitudes; of this group, 774 full- or part-time employees were counted for being active participants in an employer-sponsored defined contribution plan. Source: Plansponsor.com Advisers Turn to Managed Accounts as Demand for Customized Plan Design Options Grows As demand for customized plan design options continues to grow, plan sponsors are increasingly embracing managed accounts as a solution within their plans. More than a quarter of plan sponsors queried by Fidelity Investments said they were planning to introduce more managed account options into their fund lineup this year. Some plan sponsors are going even further, making managed accounts the qualified default investment alternative for some or all participants. Fully 87% of recordkeepers had managed accounts available on their platform, and another 7% planned to offer them in the next two years, according to Cerulli. Source: Planadviser.com Half of Americans Say They're Reducing or Stopping Retirement Savings Due to Inflation Managing rising inflation is causing 54% of Americans to reduce or stop socking away retirement savings, according to a new survey by Allianz Life. Allianz heard from 1,004 respondents that 43% of them had to dip into retirement savings to meet rising costs. Meanwhile, 75% said they're worried the cost of living will impact their overall retirement plans, according to the September poll. Source: Planadviser.com Three Things Employees Want Now From Their 401k A new Mercer report about employee financial stress also revealed some interesting findings concerning what workers think about, and want most from, their 401ks. Source: 401kspecialistmag.com Young workers are relying on more than their 401ks to save for retirement as other types of investments play a greater role in their long-term wealth plans, according to the annual nationwide survey of 401k plan participants from Schwab Retirement Plan Services. While the 401k remains the top retirement savings vehicle for today's workers overall, Gen Z and Millennial workers are more likely to also invest in cryptocurrency, real estate, annuities, and small businesses, unlike older generations. Source: Businesswire.com »» Click here for More Studies, Research, and White Papers 403b Plans Among Higher-Ed, DC Plans Viewed as Top Benefit for Attracting Talent Findings from a bi-annual survey of retirement plan decision-makers in the higher education sector show that the DC plan is the No. 1 most important benefit for attracting and retaining talent. What's more, 90% also agree that a DC retirement plan helps attract high-quality employees, and 87% agree it helps retain high-quality employees. Source: Napa-net.org »» Click here for More 403b Material Court and Legal New ERISA Retirement Plan Court Cases Pending ERISA class action lawsuits, alleging that plans have charged excessive fees or provided poorly performing investment selections in retirement plans, have continued in recent months. The U.S. Supreme Court's January 2022 ruling in Hughes v. Northwestern University has not stopped the deluge of these filings, even as summer rulings in the Sixth Circuit have potentially narrowed the pleading standards for these types of lawsuits. Source: Hallbenefitslaw.com What DC Plan Sponsors Should Know About Recent Litigation Trends: Part 1 Callan reviewed 165 lawsuits filed against mid- to mega-sized defined contribution plans ($175 million to $10 billion-plus) between January 2019 and August 2022, to provide an analysis of trends in litigation centered on the fiduciary duties outlined in ERISA. For ERISA litigation, 2020 was a bumper year, with 73 new cases filed. After the U.S. Supreme Court agreed to hear Hughes v. Northwestern in September 2021, the rate of new lawsuits slowed. As a result, 2021 saw only 39 lawsuits. After the decision was issued in January 2022, the rate of litigation resumed. As of August 15, this year has seen 32 new lawsuits. Source: Callan.com What DC Plan Sponsors Should Know About Recent Litigation Trends: Part 2 Callan reviewed 165 lawsuits filed against mid- to mega-sized DC plans ($175 million to $10 billion-plus) between January 2019 and August 2022, to study trends in DC plan litigation centered on the fiduciary duties outlined in ERISA. The first article on this topic outlined some major findings. This article discusses the four key themes identified in Callan's analysis of these suits. Source: Callan.com Yale 403b Plaintiffs Move Ahead to Jury Trial Plaintiffs in one of the first university 403b suits to be filed will get their day in court. The suit against Yale University was one of the first to be filed in this area by Schlichter Bogard & Denton LLP in August 2016. As has been the case with most in this genre, it alleged that employees paid excessive recordkeeping fees in addition to selecting and imprudently retaining funds which the plaintiffs claim have historically underperformed for years. Source: Napa-net.org Court Finds No ERISA Liability for Plan Provider Who Delivered Self-Interested Rollover Advice A New York federal court recently held that a service provider for employer-sponsored retirement plans was not liable as a fiduciary under ERISA when it used participant information to encourage certain plan participants to roll over assets into its more expensive managed account program. Source: Erisalitigationadvisor.com 403b Plan Fiduciaries Fend Off Excessive Fee Claims Yet another excessive fee suit has been dismissed for failing to make a "plausible" case. The plaintiff, in this case, is Kaila Gonzalez, a participant in the Northwell Health 403b Plan, who filed suit against Northwell Health, Inc., the Northwell Health 403b Plan Committee, and 10 other unidentified Plan fiduciaries. She alleged that the defendants here allowed the Plan to be charged excessive recordkeeping fees and imprudently retained certain investment options in the Plan's investment menu in violation of ERISA. Source: Ntsa-net.org »» Click here for more Court and Other Legal Issues Compliance and Regulatory If you carefully follow a procedure authorized by the IRS in 2017, your plan could elect to have participants provide summaries instead of the source documents that substantiate their immediate and heavy financial needs. This article outlines the procedure and then reviews the rules that led to your current practice. Source: Thomsonreuters.com 401k Errors That Should Require a Plan Provider Change Change for the sake of change is a bad idea, you need a reason for it. There are certain plan errors where 401k plan sponsors should consider change and that change is a change of their plan providers. Here is a list of 401k errors that should get the plan sponsor to consider making such a change. Source: Jdsupra.com »» Click here for more Compliance and Regulatory Material Marketplace News Empower Hit With Government Markets Lawsuit CAPTRUST Picks Up Patriot Pension Advisors InvestmentNews Is Again For Sale ARA's Adams to Retire, 401k Specialist's Sullivan to Succeed Him
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