Red State Coalition Sues to Stop ESG Rule
|
In This Issue
General Items Red State Coalition Sues to Stop ESG Rule Mere days before the Labor Department's ESG regulation is set to go into effect, a coalition of 24 states has filed suit to stop it. More specifically, the coalition, led by Texas Attorney General Ken Paxton, says in a press release that the 2022 rule "undermines key protections for retirement savings of 152 million workers -- approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets -- in the name of promoting environmental, social, and governance factors in investing, including the Biden Administration's stated desire to address climate change." Source: Napa-net.org/p> Five Ways to Help Make Retirement Plans' ESG Investments a Success With socially conscious investing taking root in the public's mind, more retirement plans are offering ESG investments, funds, and investments that emphasize environmental stewardship, social awareness, and strong governance. This article provides an overview of what you need to know about ESG for retirement plan investments including five things to remember when investigating or implementing ESG investment options into a retirement plan. Source: Hubinternational.com/p> Insight: Studies, Research, and White Papers Which Benefits Are Valued Most Depends on Age of Workers A recently released Workplace Wellness Survey found that when it comes to attitudes toward employee benefits, there are large differences by employee age. Indeed, middle-aged employees reported being more likely than younger or older workers to be concerned about various aspects of their well-being. Older workers were, unsurprisingly, focused on retirement benefits. And younger workers highly valued help with day-to-day bills, student loan debt assistance, and career advancement opportunities. This paper explores these benefit preference differences by age in greater detail. Source: Ebri.org/p> American Views on Defined Contribution Plan Saving, 2022 The survey polled respondents about their views on defined contribution retirement account saving and their confidence in 401k and other DC plan accounts. Survey responses indicated that Americans value the discipline and investment opportunity that 401k plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts. A majority of respondents also affirmed a preference for control of their retirement accounts and opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company. Source: Ici.org/p> TDF Flows Jump 35%, but CITs Are Stealing Growth Target-date funds continued to reign supreme among retirement savers last year, but new data shows collective investment trust funds may keep them from regaining the heights of a few years ago. Retirement savers boosted TDF contributions in 2022 at a 35% higher rate than in 2021, well off the negative flows seen in 2020 at the height of the pandemic, according to the latest data from investment research provider Morningstar. Source: Planadviser.com/p> Hands Off Our 401ks: Americans Reject Changing Key Features Asked about their views on defined contribution plans, an overwhelming majority of respondents in a new survey say they value the investment opportunity 401k plans provide and are opposed to changing the tax preferences or investment control in those accounts. Source: Ntsa-net.org/p> »» Click here for More Studies, Research, and White Papers Court and Legal Federal Judge Dismisses Booz Allen 401k Mismanagement Suit In Tullgren v. Booz Allen Hamilton Inc., Judge Michael S. Nachmanoff of the U.S. District Court for the Eastern District of Virginia dismissed an employee's 401k mismanagement suit against Booz Allen Hamilton, at least for now. The judge gave the employee leave to file an amended complaint within 14 days. Source: Hallbenefitslaw.com/p> New York District Court Rejects ERISA Excessive Fee Claims as Insufficient A district court in New York recently dismissed a putative class action challenging retirement plan recordkeeping and investment management fees. The case is Singh v. Deloitte LLP. The court's decision adds to the growing number of Second Circuit district courts relying on out-of-circuit appellate decisions to dismiss excessive recordkeeping and investment management fee claims for failure to plead proper benchmarks against which to measure fees. It also lends support to a standing argument advocated by the defense bar that, if it were to gain more traction, could substantially reduce the financial exposure in similar lawsuits. Source: Erisapracticecenter.com/p> Allianz Asset Management 401k Participants Allege Self-Dealing Two participants in the Allianz 401k plan allege the asset manager maintained an all-proprietary fund lineup that included expensive, underperforming investments for the benefit of the defendants. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries. Source: Planadviser.com/p> »» Click here for more Court and Other Legal Issues Cyber and Plan Security Any case that analyzes the scope of liability for ERISA plan sponsors and service providers following a cybersecurity incident and/or identity theft will be heavily scrutinized because of a scarcity of case law and regulatory guidance on the issues, particularly any judicial precedent that widens the net of potential liability. Source: Wagnerlawgroup.com/p> »» Click here for more on Cybersecurity Issues Compliance and Regulatory Annual Notice of Discretionary Match in Pre-Approved 401k Plans May Be Required Soon Employers that provide 401k plans on documents that have been "pre-approved" by the Internal Revenue Service beware: there is yet another annual notice requirement that may need to be added to your compliance list. Source: Ogletree.com/p> Automatic Enrollment is Coming for Your Retirement Plan...Sorta This new SECURE 2.0 contains many new provisions, including changes, again, to RMDS, but also includes changes that had long been discussed but never occurred. One such change is the requirement that 401k and 403b plans feature automatic enrollment for employees of companies that sponsor such plans. While this new requirement may scare plan sponsors, there are quite a few exceptions that effectively make the automatic enrollment feature only apply to new plans of larger entities. Source: Graydon.law/p> SECURE 2.0 Adds New Distribution Options for DC Plans SECURE 2.0 introduced several new distribution options and tax reporting rules for defined contribution plan sponsors. Below is an overview of the new provisions and their potential implementation dates. Here is a quick summary of the new distribution changes in SECURE 2.0. Source: Faegredrinker.com/p> Major SECURE 2.0 Error Puts Catch-Ups in Jeopardy The American Retirement Association recently identified what it calls a "significant technical error" in the SECURE 2.0 Act of 2022 regarding catch-up contributions. Specifically, according to wording in the current legislation, beginning in 2024, no participants will be able to make catch-up contributions (pre-tax or Roth). That's the result of the elimination of a subparagraph in the body of the legislation to allow for a conforming amendment, but in the process inadvertently eliminated the ability to make any pre-tax catch-up contributions. Source: Asppa.org/p> SECURE 2.0 Error Threatens Catch-Up Contributions, but Meaning Is Clear There's an apparent error in the retirement reform section of the 4,000-page omnibus spending bill passed by Congress by a thin margin in December 2022. A paragraph was omitted from the SECURE 2.0 Act of 2022 that technically eliminates reforms to allow pre-tax and pre-existing after-tax catch-up contributions to retirement plans. While the omission of a certain section of the bill creates a potential error, there is also a clear intention to allow for catch-up contributions going forward in 2023 and 2024, according to David Levine, co-chair of the Groom Law Group's plan sponsor practice. Source: Planadviser.com/p> Plan Operational Review Guidance Groom principal Kelly Geloneck joined PLANSPONSOR Magazine for their cover feature, "Risk Protection" where she discussed plan compliance and operational reviews. In the article, Geloneck stated, "plan compliance reviews can vary widely in their depth and scope." Source: Groom.com/p> »» Click here for more Compliance and Regulatory Material Marketplace News SageView Launches Financial Education Platform for Participants OneAmerica Teams Up With Benartzi on New Retirement Income Product New Software Aims to Reduce Risk in Target-Date Funds
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 © 2023 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
|
