Dialing Up the Intensity of Missing Participant Searches
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In This Issue
Fiduciary and Plan Governance Dialing Up the Intensity of Missing Participant Searches Understanding how (and when) to increase the intensity of a missing participant search is vital to fulfilling a plan sponsor's fiduciary duty to ensure that plan participants receive the retirement benefits that they're owed. Source: 401kspecialistmag.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Record Number of 401k Hardship Withdrawals Seen in 2022 Inflation and higher prices overall are causing more Americans to take 401k hardship withdrawals. The Wall Street Journal, citing Vanguard research, reported that a record 2.8% of the five million people in 401k plans run by the investment behemoth tapped their retirement savings in 2022 for financial hardship reasons. It's an increase from 2.1% in 2021 and a pre-pandemic average of about 2%. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers SECURE 2.0: What It Might Mean for 401k Providers A change in the law for retirement plans will give retirement plan providers some new business, but it also can create anxiety, stress, or aggravation. This article is about some of those provisions of SECURE 2 that might be of interest to 401k plan providers. Source: Jdsupra.com 403b Plans What Deadlines Apply to 403b Plans Whether you are a school business official or a human resources employee of a nonprofit organization, chances are that you are juggling so many responsibilities that your time is at a premium. Knowing deadlines for amending your employer's 403b plan document helps keeps that plan compliant. Source: Voya.com »» Click here for More 403b Material Court and Legal 7th Circuit Poised to Revive Northwestern ERISA Suit The U.S. Court of Appeals for the Seventh Circuit appeared receptive to reviving an ERISA class action suit against Northwestern University, claiming mismanagement of the workers' 403b plan, albeit on a limited scale. The employees alleged that Northwestern breached their fiduciary duties under ERISA by allowing too many investment options, causing them to pay excessive fees. In addition, they claimed that including the more expensive share classes of mutual funds precluded their access to lower-fee institutional share classes of mutual funds. Source: Hallbenefitslaw.com Employees' 401k Fee Suit Against Capital One Tossed Capital One won a recent dismissal in one of the many ERISA suits, filed by workers, concerning the low-performing BlackRock target-date-funds. On the same day that he dismissed a similar suit against Booz Allen Hamilton, Judge Michael S. Nachmanoff dismissed the Capital One employee suit. Still, as in the Booz Allen case, he gave the employees 14 days to amend their suit. Source: Hallbenefitslaw.com In a striking reversal of approach beginning in the summer of 2022, the District Court for the Eastern District of Wisconsin went from denying, in whole or in part, virtually every motion to dismiss ERISA lawsuits targeting plan recordkeeping fees and investment fund selections to granting all of them. This nearly 180-degree pivot comes on the heels of the Seventh Circuit's ruling in Albert v. Oshkosh Corp. which affirmed the dismissal of such claims. Source: Erisapracticecenter.com Courts Continue to Scrutinize Arbitration Clauses in ERISA Plans A recent district court decision highlights the continued uncertainties about what it means to include an arbitration clause in an ERISA plan. While courts generally agree that such clauses are, in theory, enforceable, the extent to which courts will enforce a specific clause remains uncertain given divergent outcomes of decisions regarding motions to compel arbitration. Source: Beneficiallyyours.com Early Excessive Fee Case Nears Settlement The parties in one of the first university 403b excessive fee suits -- by participant-plaintiffs represented by the Schlichter law firm -- have come to terms on the eve of going to trial. The suit, filed in August 2016, involved two plans sponsored by the University of Southern California. Source: Ntsa-net.org Federal Magistrate Recommends Dismissal of ERISA Case Against Dish Network A federal magistrate recommended the dismissal of a lawsuit brought under ERISA against the Dish Network Corporation for its use of actively managed Fidelity Freedom Funds. The recommendation -- in this case, dismissal for failure to state a claim -- is not binding until a U.S. district judge reviews and approves it, but recommendations of this kind are normally approved. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Unfinished Business for SECURE 2.0: Podcast The SECURE 2.0 Act of 2022 was signed into law in the waning days of 2022. But some things need fixing and some things you may have overlooked. Nevin Adams and Fred Reish highlight five key areas calling for attention. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory What Catch-Up Contribution? Congressional Snafu Leaves Older Retirement Savers in Limbo The SECURE 2.0 Act of 2022 was signed into law in the waning days of 2022. But some things need fixing and some things you may have overlooked. Nevin Adams and Fred Reish highlight five key areas calling for attention. Source: Marketwatch.com Historically, employers were not permitted to provide employer matching or nonelective contributions in their 401k, 403b, and governmental 457b plans on a Roth basis. These types of employer contributions were allowed only on a pre-tax basis. Under a new provision of the SECURE 2.0 Act, effective immediately, plans may now allow participants to elect to receive matching and nonelective contributions on a post-tax basis. Source: Schneiderdowns.com The SECURE Act 2.0: Optional Treatment of Employer Contributions as Roth Contributions The SECURE Act 2.0 permits plan sponsors to give participants the option of receiving employer contributions on a Roth basis. This provision is effective on the date of enactment, December 29, 2022. However, the option may not be as attractive as it first appears, since the matching and nonelective contributions must be fully vested when made. Source: Fredreish.com Secure 2.0's New QDRO Rules: The Mainstreaming of the QLAC? The regs must be changed to reflect that if a QLAC is issued as a joint and survivor annuity (which it is required to be unless spousal consent is obtained, under plans to which such rules apply), and a divorce subsequently occurs before the date the annuity payments begin, the DRO "will not affect the permissibility of the joint and survivor annuity benefits" as long as that order meets several requirements. Source: Businessofbenefits.com »» Click here for more Compliance and Regulatory Material Marketplace News PE Firm LMP Invests in Retirement Services Provider Definiti Morningstar Launches ESG 401k Designed for Small Employers Pontera Integrates its 401k Management Capabilities into Envestnet's Ecosystem Sageview Launches New Financial Education and Engagement Platform for Retirement Plan Participants Morningstar and PAi's ESG Pooled Employer Plan Goes Live
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