Unlocking the Power of Retirement Plans for Climate Action
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In This Issue
Fiduciary and Plan Governance Unlocking the Power of Retirement Plans for Climate Action In this op-ed, Impact Experience's Yejide Olutosin and Jenna Nicholas discuss a recently published opinion letter providing a legally defensible framework for evaluating ESG factors in employer-sponsored retirement plans. Source: Wagnerlawgroup.com Biden ESG Rule Shows Some Staying Power On September 21, 2023, the District Court for the Northern District of Texas rejected a challenge brought by 26 states that argued that the DOL 2022 Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule was "arbitrary and capricious." The court not only concluded that the DOL had complied with the Administrative Procedure Act in crafting the 2022 ESG Rule but also highlighted that the 2022 ESG Rule "changes little in substance" from the DOL's previous rulemakings. Source: Groom.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Young Retirement Investors Are Eager for Advice Younger generations desire the advice of a financial professional at similar rates as their older counterparts, pointing to an unmet demand for plan providers to offer reasonably priced in-plan financial advice and planning solutions, according to the latest Cerulli Edge--U.S. Retirement Edition. Source: Cerulli.com Short-Term Financial Needs Infringing on Retirement Saving: BofA Report Employees are prioritizing short-term financial needs over retirement savings, according to findings from Bank of America's 13th annual Workplace Benefits Report. The report found fewer employees are prioritizing long-term retirement savings (31%, down from 45% in 2022) as a growing number are focusing on short-term financial needs, including paying off credit card debt (16% vs. 11% in 2022) and saving for the unexpected (13% vs. 8% in 2022). Source: 401kspecialistmag.com 401k Loans Grow as Participants Struggle With Emergency Savings While 401k loans have increased since their low during the COVID-19 crisis in 2020, they have yet to reach pre-pandemic levels. New findings from T. Rowe Price report that while the current percentage of participants taking 401k loans increased across all age groups, average loan amounts decreased from 2022 to 2023 among all cohorts except for participants between the ages of 50 to 59, who also had the highest loan balances. Source: 401kspecialistmag.com Data Shows 401k Plans Offering Wide Array of Diversified and Cost-Effective Investment Options Employers play a significant role in designing diverse investment lineups in 401k plans, according to an updated study from BrightScope and the Investment Company Institute. The study found that in 2020, the average large 401k plan offered 28 investment options, of which about 13 were equity funds, three were bond funds, and nine were target-date funds. Source: Ici.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers DOL Makes Another Fiduciary Foray: Podcast Late one recent Friday afternoon, the Department of Labor dropped off a draft regulatory package for review that would redefine fiduciary invest. advice under ERISA. In this podcast, Nevin Adams and Fred Reish explore the possibilities of this initiative including the history and potential future. Source: Napa-net.org Court and Legal Forfeiture Offset Fuels Fiduciary Breach Suit Plaintiff Konstantina Dimou, a participant in the Thermo Fisher Scientific Inc. 401k Retirement Plan, filed suit on behalf of the plan as a representative of a class of participants and beneficiaries of the Plan, against Defendants Thermo Fisher Scientific Inc. and the Management Pension Committee of the Thermo Fisher Scientific Inc. 401k Retirement Plan "for (1) breach of ERISA's fiduciary duties, (2) violation of ERISA's anti-inurement provision, and (3) engaging in self-dealing and transactions prohibited by ERISA." Source: Napa-net.org 10th Circuit's "Meaningful Benchmark" Ruling Will Not Stymie Lawsuits, Experts Says The U.S. 10th Circuit Court of Appeals has weighed in on an ongoing court battle over the "meaningful benchmark" pleading standard for 401k participants bringing lawsuits alleging excessive investment management or recordkeeping fees, but it may not slow lawsuits against plan sponsors, according to legal experts. Source: Planadviser.com Berkshire Engineering Firm Gets Reprieve in 401k Suit An engineering conglomerate owned by Berkshire Hathaway just won an initial victory in a lawsuit brought against the company over its 401k plan. The company, Marmon Holdings, was sued last year in a proposed class action. In a September 22 order, U.S. District Court Judge Robert Blakey granted Marmon's motion to dismiss, finding that the plaintiffs failed to show that the plan had excessive recordkeeping fees or that the investments, including the custom target-date series, underperformed peers. Source: Investmentnews.com Last week, a federal district court judge in the Eastern District of Virginia became the first to conclude that the participants' allegations of imprudence related to the BlackRock Funds were plausible (Trauernicht v. Genworth). Unlike the other cases challenging the prudence of investing in the BlackRock Funds, the participants here were permitted to use facts learned during early discovery to amend their complaint before any substantive ruling on the defendant's motion to dismiss. Source: Erisapracticecenter.com Four Takeaways for Benefits Attys After Judge Clears ESG Rule A Texas federal judge's decision finding the U.S. Department of Labor's socially conscious investing rule didn't violate federal law represents a significant legal victory for the DOL at a time the agency's broader rulemaking efforts are under fire, attorneys say. Source: Wagnerlawgroup.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory Have You Been Counting Those Long-Term Part-Time Employee Hours? In efforts to expand access to retirement savings programs for more Americans, the SECURE Act and SECURE 2.0 both included new rules that will require plans to allow long-term part-time employees to make elective deferrals into a 401k plan if they meet certain minimum hours requirements. This article reviews the subject because the effective date is fast approaching. Source: Graydon.law UBTI and 401k Retirement Plans A 401k plan will trigger Unrelated Business Taxable Income (UBTI) if the plan regularly carries on any business or invests in a pass-through tax entity that regularly carries on any business. This article helps explain UBTI and its ramifications for a 401k plan. Source: Ferenczylaw.com SECURE 2.0: Retirement Plan Changes for 2024 The SECURE 2.0 Act of 2022 sets forth several changes affecting retirement plans that go into effect over several years. This article focuses on key changes for 2024 that may be implemented. Source: Bradley.com What Information Do You Need for our 401k Audit? Nervous apprehension tends to overwhelm plan sponsors new to 401k audits because they don't know how involved they will need to be in the document production for the audit. Often, they are hopeful that one or more of their service providers will "take care of everything" as they promised. The bottom line is that the extent of the plan sponsor's and each service provider's involvement in document production depends on how the plan was set up. Source: Belfint.com »» Click here for more Compliance and Regulatory Material Marketplace News Ameritas Retirement Plans Announces 403b Pooled Employer Plan "The American Dream 401k" Debuts from Matson Money
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