Biden's First Veto Keeps DOL's ESG Rule in Place
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In This Issue
Items of Special Interest to Service Providers Biden's First Veto Keeps DOL's ESG Rule in Place President Biden on Monday used his first veto to maintain an environmental, social, and governance rule for retirement investing plans that, according to many legal experts and industry participants, has no material bearing on the management of those investments. Source: Planadviser.com Florida Court Decision's Impact on Rollover Advice The court did not change the regulatory definition of fiduciary advice and its application to advice to retirement plans or IRAs. Even if the expanded interpretation for rollover recommendations does not apply, where broker-dealers and their advisors provide ongoing advice to retirement investors they can still be fiduciaries for recommendations to IRA owners, plan fiduciaries, and participants. As a result, broker-dealers and their advisors will still need the relief provided by PTE 2020-02, including the best interest process it requires. Source: Brokerdealerlawblog.com DOL Says It Might Appeal Rollover Ruling Commenting that "the Florida court's analysis is rooted in a fundamental legal error," the Department of Labor says it may appeal a ruling that upended its guidance on fiduciary duty regarding rollovers. Source: Napa-net.org General Items The Top 10 Wrong Ideas That Plan Sponsors Have About Their Retirement Plans While most employers try to do right by their employees with their retirement plans, the employer's lack of expertise and sophistication in the nuances of retirement plans are often taken advantage of. Since employers delegate plan decisions to these unscrupulous professionals, employers rely on major misconceptions about retirement plans that unwittingly expose them to potential liability. This article is about the ten wrong ideas that plan sponsors have about retirement plans and the retirement plan business. Source: Jdsupra.com Rethinking 401k Plan Success: The Power of Deferral Rates From the beginning of 401k plans, the retirement industry has focused on the performance of individual funds as the key driver of retirement readiness. But a study by the Putnam Institute in 2006 and repeated in 2012 concluded that increasing deferral rates have the greatest potential impact on a 401k participant's account balance at retirement. Source: Retirementplanblog.com Fiduciary and Plan Governance Advisers Recommend Fiduciary Outsourcing Services, Mostly for Small Plans Plan advisers often recommend that clients use fiduciary outsourcing services, alleviating the administrative burden on both advisers and clients, according to new industry research. More than 20% of advisers said clients spend between a quarter and half of their time on plan administrative tasks that could be outsourced. Source: Planadviser.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Five Notable Participant Behaviors Identified in T. Rowe Price 401k Report While a new T. Rowe Price 2022 Year-End report shows 401k plan participants have largely stayed the course and not significantly changed their loan, distribution, or withdrawal behavior despite the recent turbulent market environment, that doesn't mean there aren't some interesting findings about participant behavior in the research. This article reviews five examples. Source: 401kspecialistmag.com DC Withdrawal Activity Remained Low in 2022: ICI Despite market volatility, inflation, and lingering concerns of a recession, recent Investment Company Institute research shows that defined contribution plan participant withdrawal activity remained low in recent years. According to ICI's research report, 4.1% of DC plan participants took withdrawals in 2022, compared with 4.1% in 2021 and 3.8% in 2020. Source: 401kspecialistmag.com This paper provides an update of a longitudinal analysis of 401k plan participants drawn from the EBRI/ICI 401k database. A few key insights emerge from looking at the 3.7 million consistent participants over the four years from year-end 2016 to year-end 2020. Source: Ebri.org Immediate Vesting Is Better for Recruitment Than Cliff Vesting Is for Retention An Employee Benefit Research Institute research panel focused on employee tenure argued that non-immediate vesting schedules for employer matches are an overrated retention tool. An immediate vest is a smarter recruitment tool, and vesting thresholds can often be outweighed by accepting a higher-paying job elsewhere, according to the panelists. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Court and Legal Excessive Recordkeeping Fee Claim Squeaks by a Motion to Dismiss A federal court in Wisconsin recently allowed a putative ERISA class action in Lucero v. Credit Union Ret. Plan Ass'n to proceed to discovery on the claim that a 401k plan paid excessive recordkeeping fees. This decision highlights an important trend in ERISA litigation. Lucero is part of an ongoing surge of ERISA class actions challenging the recordkeeping costs of 401k plans. Plaintiffs in these cases claim their plans' fiduciaries failed to prudently monitor recordkeeping costs, saddling plan participants with "excessive" fees. Source: Dorseyerisa.com ERISA Suit Against SeaWorld Advances A class action lawsuit brought by former SeaWorld employees that alleged participants in the retirement plan -- the SWBG LLC 401k -- were harmed by the defendants' imprudent conduct will proceed, following the ruling of a federal judge in California. Source: Plansponsor.com »» Click here for more Court and Other Legal Issues State-Based Private-Sector Retirement Programs Resources for Tracking State and Local Retirement Initiatives This 15-page article summarizes state and local retirement initiatives for private-sector workers and rounds up relevant Mercer and third-party resources. This listing will be updated periodically and may not always reflect the latest developments in every locality. Source: Mercer.com Compliance and Regulatory SECURE Act 2.0 Brings New and Improved Self-Correction Opportunities With each program update, plan sponsors would benefit from additional opportunities to self-correct insignificant errors. When an error was not eligible for self-correction, plan sponsors could file a Voluntary Correction Program application. These were excellent alternatives, but it turns out, everything can always be better. SECURE 2.0's improved self-correction opportunities. Source: Belfint.com DOL Reopens Comment Period for QPAM Exemption The DOL announced this week that it is reopening the comment period for proposed changes to the qualified professional asset manager exemption until April 6. The extension comes as the DOL says that at least one interested party may have additional information to provide that was not submitted by the previous January 6 comment deadline. Source: 401kspecialistmag.com All ROBS Plans Must File a Form 5500 ROBS plans can be a terrific way to fund a new business. But, a ROBS company must make sure to operate the plan as a qualified retirement plan, with all the requirements that entail. One such task is the annual Form 5500 filing. Unfortunately, many professionals within the industry mistakenly tell ROBS owners that they don't need to file a Form 5500. This is incorrect. With limited exceptions, all qualified retirement plans must file a Form 5500 with the DOL each year. Source: Klblawgroup.com »» Click here for more Compliance and Regulatory Material Marketplace News JULY Makes a Rocky Mountain Move
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