Retirement Plan Committee Best Practices
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In This Issue
Fiduciary and Plan Governance Retirement Plan Committee Best Practices Each time the retirement plan committee meets, does it feel like there is a new rule or legislation your plan is required to comply with? While at the same time, participants are demanding more of you and your organization to be successful because the defined contribution plan is likely the only savings vehicle these individuals will ever have for retirement. If these feelings resonate with you, so will the committee best practices we discuss in this guide. This paper will help you understand what ERISA (and similar state laws) requires for plans, how committees have typically functioned, and how committees will need to function to be successful and sustaining for years to come. Source: Multnomahgroup.com Should 401k Loans Be Allowed, Encouraged, or Forbidden? A Fiduciary Perspective As interest rates increase, the cost of borrowing money has increased. It's not surprising if more people begin to look at borrowing from their own 401k retirement savings accounts versus borrowing from more traditional sources. Is this a good idea? Indeed, is it not just a good idea, but something that should be encouraged? Or is it the path to retirement ruination and should it not even be allowed? Source: Fiduciarynews.com ESG Considerations for Retirement Plans: A Moving Target For those with an eye on ERISA and its fiduciary rules, the past few years have caused whiplash when it comes to environmental, social, and corporate governance investments in retirement plans. With a new rule from the Department of Labor imminent, this article reviews where we are, how we got here, and what's next. Source: Benefitslawadvisor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Callan: DC Plan ESG Use Drops in '22 on Backlash, Rule Confusion Pushback against ESG investing by state governments and some in the investing community led to a drop in use among institutional investors this year, according to research released by fund consultant Callan. In annual surveying of 109 institutional investors on environmental, social, and governance implementation, Callan found just 35% of respondents incorporated ESG factors into investment decisions this year, down from 49% in 2021. Source: Plansponsor.com Self-directed Retirement Plan Participants Allocate Few Assets to In-Plan ESG Funds Self-directed retirement plan investors infrequently allocate to environmental, social, and governance investments, new research finds. The research, by PGIM and the Employee Benefit Research Institute, examined the allocation decisions of 9,324 new defined contribution plan participants, across 108 DC plans, who are directing their accounts and where there is at least one ESG fund available in the core menu. Source: Plansponsor.com Is Retirement Saving "Wasted" on the Young? In a paper provocatively titled "The Life-Cycle Model Implies that Most Young People Should Not Save for Retirement" no fewer than four of them take 48 pages to make that case. Like most research, the conclusion is a premise based on assumptions. Here the most basic is that this thing called a "life-cycle model" is worth considering in the first place. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Court and Legal Goldman Sachs Successful in Getting 401k Fee Class Action Dismissed A New York district court recently summarily dismissed, with prejudice, a 401k plan participant's putative class action complaint alleging breaches of fiduciary duty. The Plaintiff alleged that the Plan fiduciary-Defendants breached their duties of prudence and loyalty under ERISA by (1) failing to adopt an Investment Policy Statement, and (2) making decisions regarding the choice to remove or retain certain underperforming investment options based on their self-interest. Source: Erisalitigationadvisor.com Excessive Fee Suit Settles in 18 Months The parties in another excessive fee suit have come to terms six months after getting the green light to go to trial. In the U.S. District Court for the Eastern District of Wisconsin the parties noted that on Sept. 13, 2022, they "...mediated before private mediator Bob Meyer of JAMS, and reached a settlement in principle to resolve this matter." Source: Napa-net.org Plan sponsors have had good recent success in excessive fee and performance lawsuits, with three federal circuit courts of appeal upholding motions to dismiss. But before we start reaching any conclusions as to whether the tide has changed in the long war in excessive fee cases an Iowa court in Rodriguez v. Hy-Vee, Inc. has applied the recent appellate case law and come to mixed conclusions on familiar claims of excessive investment and recordkeeping fees. Source: Euclidspecialty.com Seventh Circuit Still Skeptical of Excessive Fee Claims After High Court Ruling The 7th US Circuit Court of Appeals recently upheld the dismissal of a participant's claims that DC plan fiduciaries imprudently allowed excessive administrative and investment fees (Albert v. Oshkosh Corp.). The court was unpersuaded by the participant's request to vacate the original district court decision dismissing his lawsuit in light of the Supreme Court's decision in Hughes v. Northwestern University. The 7th Circuit's decision, in this case, extends a growing trend of federal appeals courts expressing skepticism toward some of the most common allegations in many ERISA excessive fee lawsuits since the high court's Northwestern ruling. Source: Mercer.com Adviser CEO Faces Up to 45 Years for Fraud, Keeping Employee 401k Contributions The CEO of a financial advisory firm pled guilty last week to charges including embezzling more than $313,000 from clients and using employee contributions to the firm's 401k plan for both personal and company use. He also pled guilty to two counts of wire fraud and one count of making a false statement to the IRS in connection with schemes to defraud clients and failing to pay the employees' retirement contributions. He faces up to 45 years in prison. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC SECURE 2.0 Likely to Pass This Year Three separate bills, dubbed SECURE 2.0 when taken together, are likely to be passed into law by this December, according to Washington insiders. Source: Planadviser.com Auto-Portability Receives Bipartisan Backing With House Bill A new bill that would allow for automatic 401k rollovers has received support from the U.S. House of Representatives, officially securing bicameral legislative backing. The Advancing Auto-Portability Act of 2022 (H.R. 9252) was introduced on October 28 and is aimed at reducing leakage in defined contribution retirement plans. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Plan Amendment Deadline for SECURE and CARES Amendments This Tax Magazine article by Groom principals Elizabeth Dold and David Levine contains a summary of the key SECURE, Miners, and CARES Act amendments, in chart format, for both defined benefit and defined contribution plans, along with a look at the amendment deadlines that apply to these provisions. Source: Groom.com DOL Clarifies Bonding Requirements for Pooled Employer Plans A DOL information letter clarifies how ERISA's bond requirements apply to a pooled employer plan. A PEP is a type of multiple-employer plan created by the SECURE Act to make it easier for unrelated employers to participate in group retirement plans. Source: Mercer.com 2022 Retirement Plan Year-End Amendments and Operational Compliance As the end of 2022 approaches, it's again time for plan sponsors to review their plan documents and plan operations to ensure compliance with increasingly complex qualification requirements and moving deadlines. While there are few, if any, required plan amendments for 2022, plan sponsors must remain diligent about amendment deadlines, operational compliance with changes in law, and ensuring later-adopted plan amendments accurately reflect plan operations. Source: Groom.com »» Click here for more Compliance and Regulatory Material Marketplace News Allianz Life Adds Annuity for Defined Contribution Plans
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