Three Best Practices for Avoiding a Fiduciary Breach
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In This Issue
Fiduciary and Plan Governance Three Best Practices for Avoiding a Fiduciary Breach Given the many lawsuits filed against retirement plan sponsors in recent years for breaching their fiduciary duties, here are the steps plan committees should be taking to mitigate risk. Source: Investmentnews.com The Who, When and Why of Independent Fiduciaries Employee benefit plan sponsors may need to hire an independent fiduciary in certain situations to avoid conflicts of interest and prohibited transactions under ERISA. What is an independent fiduciary, and when might a plan need one? Source: Wagnerlawgroup.com Fiduciaries Must Revisit ERISA Origins ERISA was created with important protections for plan fiduciaries who are judged as prudent experts under ERISA's fiduciary standard of care. In this article published May 24, 2023, by Law360, ERISA attorney Jeff Mamorsky explores the history of ERISA and why the underpinnings of ERISA are more important than ever. Source: Cohenbuckmann.com Participant Data Breach Hits Retirement Clearinghouse Retirement Clearinghouse LLC, an industry leader in driving forward the automatic portability of retirement plans, has alerted more than 10,500 individuals that their data, including individual retirement account numbers, may have been compromised. The organization alerted individuals with written notice, dated May 12, that their information may be at risk for fraud, according to public filings in the states where they are located. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Managed Accounts See Higher Adoption: Vanguard Managed account usage has come a long way. While target-date funds have worked as a reliable investment option, usage of managed accounts has grown steadily over the past number of years. Recent Vanguard research found that 66% of its participants in defined contribution plans had a professionally managed allocation at year-end 2022, up from 40% at year-end 2013. Source: 401kspecialistmag.com EBRI Study: Inflation, Weak Stock Market Slashed Retirement Confidence The 2023 Retirement Confidence Survey published by the Employee Benefit Research Institute found that retirement confidence fell by a degree not seen since 2009. The decrease is driven primarily by inflation. Source: Planadviser.com Retirement Account Balances Increase Across the Board Despite a challenging market and high day-to-day costs, new research from Fidelity Investments finds account balances are up in 2023. Their latest findings show 401k account balances increased 4%, while IRA and 403b balances grew 5% and 6%, respectively. Source: 401kspecialistmag.com »» Click here for More Studies, Research, and White Papers Legislative and Washington DC Key Congressional Committee Approves Bill Allowing CITs in 403bs Legislation that would allow 403b plans to invest in collective investment trusts has taken a significant step forward in the House of Representatives. Source: Ntsa-net.org Congress Says It Will Fix at Least Four Errors in SECURE 2.0 Congressional leaders wrote an open letter to Secretary of the Treasury Janet Yellen and IRS Commissioner Daniel Werfel clarifying what Congress intended with certain provisions of the SECURE 2.0 Act of 2022. In the letter, a bipartisan group of Senate and House members said they intend to correct those technical errors, but they did not spell out a timetable. The errors include the startup credit, RMD, SIMPLE IRA plans, and Roth catch-ups. Source: Planadviser.com »» Click here for more on Legislative and Washington Actions State-Based Private-Sector Retirement Programs PA House Passes Keystone Saves Bill The Pennsylvania House of Representatives on May 24 passed HB 577, a bill that would create the Keystone Saves Program, which would be an automatic enrollment payroll deduction IRA retirement savings program. Source: Asppa.org Bills in CT, ME Would Adjust State Coverage for Private Sector Employees The ink is barely dry on the measures that created state-run retirement plans in Connecticut and Maine that provide coverage for private-sector employees whose employers do not, but already bills are advancing in the legislatures in those states to fine-tune those programs. Source: Ntsa-net.org Compliance and Regulatory New 401k Audit Rule for Form 5500 is Good News for Small Businesses 401k plans must be audited by an independent qualified plan auditor if they are considered a 'large plan' for Form 5500 reporting purposes. Recent DOL changes to Form 5500 will allow plans to count fewer participants when determining the need for an audit. The DOL expects the change to eliminate the audit requirement for 20,000 small business 401k plans, good news when you consider the cost, time, and effort of an audit for employers. Source: Employeefiduciary.com Changes to Hardship Withdrawal Administration From the SECURE 2.0 Act Plan sponsors of retirement plans with hardship withdrawal provisions have come to realize that complying with hardship rules is sometimes a hardship. Luckily, the SECURE 2.0 Act in Section 312 has provided relief to those plan sponsors that administer hardship withdrawals by relying on written certification. Source: Belfint.com SIMPLE IRAs vs 401k Safe Harbor Plans - 2023 This outline compares a SIMPLE IRA with a safe-harbor 401k plan and is especially important for employers who must cover participants other than just the owners. Source: Consultrms.com New Options for Retirement Plan Distributions Under SECURE 2.0 This article summarizes the new distribution options, including penalty-free withdrawals, applicable to defined contribution plans under the SECURE 2.0 Act and provides a timeline of their effective dates. The new options further evidence Congress's growing appetite for approving legislation that allows greater pre-retirement access to funds intended for retirement. Source: Verrill-law.com IRS Issues SECURE 2.0 Guidance on Expanded Availability of Self-Correction The SECURE 2.0 Act of 2022 greatly expands the availability of self-correction of compliance failures involving employer retirement plans and IRAs. On May 25, 2023, the IRS issued Notice 2023-43, which clarifies the scope of the expanded self-correction program before the IRS updates its correction program, the Employee Plans Compliance Resolution System, for the SECURE 2.0 changes. Source: Kilpatricktownsend.com »» Click here for more Compliance and Regulatory Material
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