Cybersecurity Triggers a New Paradigm in Vendor Monitoring
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In This Issue
Fiduciary and Plan Governance Cybersecurity Triggers a New Paradigm in Vendor Monitoring Data breach statistics have constantly pointed to third-party service providers being the most significant conduit for compromised personally identifiable information or personal health information. A new era in vendor monitoring has emerged to gain efficiency in the responsibility to oversee service providers. Source: Rolandcriss.com Engaging in prudent behavior is only the first step a plan fiduciary should take, however. Equally important is for the plan fiduciary to be able to demonstrate at a future date when that decision-making process might be called into question that the fiduciary engaged in a prudent process. This article provides some recommendations and insights on committee best practices. Source: Graydon.law »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Changes in 401k Plan Asset Allocation Among Consistent Participants, 2016-2020 This 12-page paper provides an update of a longitudinal analysis of 401k plan participants drawn from the EBRI/ICI 401k database. Because the annual cross-sections cover participants with a wide range of participation experience in 401k plans, meaningful analysis of how 401k participants' asset allocations evolve over their lifecycle must examine the asset allocation of 401k plan accounts of participants who maintained accounts over all of the years being studied. Source: Ebri.org Personalized Solutions Help Plan Sponsors Address Retirement Readiness According to new research, a challenge for key decision-makers at some of the nation's largest corporate DC plans is selecting the right personalized financial services for their participant base. These plans typically have sizeable, diverse participant populations with varying levels of wealth, financial challenges, objectives, and preferences. Accommodating the needs of heterogeneous plan participants requires programs and features that can fill in gaps left by target-date funds or other less personalized offerings. Source: Cerulli.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers The SEC's 2024 Examination Priorities: Impact on IRAs and Retirement Plans The SEC Division of Examinations is focused on advice to older investors and retirement investors. Advisors and their firms should review their practices for those investors. This article focuses on the priorities that could impact advice and recommendations by investment advisers and dual registrants to retirement investors. Source: Fredreish.com Retirement Advisory M&A Persists Amid Overall Deal Decline Overall dealmaking among registered investment advisers "ran out of gas" in the third quarter of 2023, but retirement plan-related transactions appear to be running on hybrid engines, according to the latest report from consultancy DeVoe & Co. Mergers and acquisitions started strong in Q3 but tapered off as higher interest rates, an uncertain economic environment and stock market volatility appeared to take their toll. Source: Planadviser.com 403b Plans A panel at the Oct. 22 opening session of the 2023 ASPPA Annual Conference noted that there is legislation that would allow 403b plans to offer CITs and separate account insurance contracts as investment options. Brian Graff, American Retirement Association CEO, highlighted the significance of the matter, noting that 15 million participants in 403bs would benefit. This is "a top priority for us," he added. Source: Ntsa-net.org »» Click here for More 403b Material Court and Legal Two More Suits Say Forfeiture Reallocation Was a Fiduciary Breach Two more suits in two different California federal district courts have just challenged the use of plan forfeitures to offset company contributions as not being in the best interests of plan participants. Source: Napa-net.org New Wave of 401k Forfeiture Lawsuits May Hinge on Plan Terms Qualcomm, Intuit, and Clorox are facing new lawsuits asking whether a common way of handling forfeited 401k money could violate federal law, a legal theory that could turn on the language used by a given plan. Source: Wagnerlawgroup.com How Retirement Security Litigation Has Impacted the DC Landscape "The role of litigation depends on where you stand," said Bradford Campbell, a partner in the law firm of Faegre Drinker Biddle & Reath. "I don't think lawsuits have made improvements." Instead, ERISA lawsuits have perpetuated a series of "fiduciary myths," said Campbell. He said those myths include assertions that passive investments reduce litigation risk vs. active investments, that lower fees reduce litigation risk, and that short-term performance is a reason for removing an investment from a plan lineup. Source: Wagnerlawgroup.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Reps. Introduce RISE Act for Micro-Businesses to Offer Retirement Plans A newly introduced bill would allow micro-sized businesses to enact full retirement plan startup tax credits and benefits originally offered in SECURE 2.0 legislation. The bill would incentivize businesses with under 10 employees to adopt retirement savings plans. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory No One Is Coming to Save You From Missing Participants Missing participants is a highly predictable aspect of our defined contribution system. In the near term, there's likely nothing that will spare plan sponsors from addressing the missing participant problem head-on. In the face of uncertainty, they must take decisive action to avoid being overwhelmed, including implementing effective, common-sense search practices, and pairing those search practices with other actions that will minimize the incidence of missing participants over time. Source: 401kspecialistmag.com 401k Plans Need the Involuntary Cash-Out Rule The author writes, "As a 401k plan sponsor, you certainly want former employees to say goodbye and take their 401k account balance with them. One way you can eliminate the balances of former employees is the use of the involuntary cash-out provision, which is something that your plan has and should exercise." Source: Jdsupra.com SECURE 2.0 Changes Catch-Up Contribution Rules SECURE 2.0 requires that all catch-up contributions for a participant whose FICA wages for the prior year exceed $145,000 be made on a Roth basis. Although this rule technically becomes effective beginning January 1, 2024, the IRS has issued guidance that effectively delays this date to January 1, 2026. Source: Ascensus.com How SECURE 2.0 Changed the Hardship Rules Employers may now establish policies and procedures allowing participants to self-certify that the hardship distribution is being made on account of a deemed immediate and heavy financial need. Employers are no longer required to collect documentation when approving hardship distributions, which should help streamline the hardship distribution process. Source: Ascensus.com SECURE 2.0 Requires Operational Compliance, Not Amendments As the end of the year approaches, sponsors of calendar-year retirement plans focus their attention on amendments and operational changes. Because SECURE 2.0 retroactive corrections require operational compliance, plans are likely to have to implement operational changes in 2024, along with those already applicable in 2023. Even though no amendments are required, some plans may want to make amendments. Source: Segalco.com »» Click here for more Compliance and Regulatory Material
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