Forfeitures Accounts -- The Next New Topic of ERISA Litigation
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Court and Legal Forfeitures Accounts -- The Next New Topic of ERISA Litigation Trends & Should You Be Concerned? A handful of new ERISA litigation cases are aiming at forfeiture accounts and trying to pull them into the never-ending list of ways in which retirement plan fiduciaries have purported to breach their fiduciary duty to plan participants. The recent lawsuits argue that even though permitted by the plan document, it was a breach of fiduciary duty to exercise discretion to use the plan's forfeitures to reduce company contributions, rather than to offset expenses of the 401k plan. Source: Graydon.law United Airlines Sues Advisers for Scheme to Defraud 401k Pilot Participants United Airlines Inc. and its retirement plan committee have filed a complaint against an independent advisor for an alleged scheme to defraud retirement plan participants through a personalized retirement account, according to court filings. United alleges that Keep Safe Investments LLC, J&K Connect LLC, and adviser Krisi Berge had, "unbeknownst to plaintiffs, and contrary to the terms of the plan," taken loans from the retirement accounts of participants in the United Airlines Pilot Retirement Account Plan for "personal gain." Source: Planadviser.com AT&T Rebuffed in Controversial 401k Prohibited Transaction Ruling The telecommunications giant's motion to have a controversial appellate court decision reconsidered by the full court has been rejected. The denial of a rehearing leaves the case where it was; with a directive for the lower court to reconsider the issue(s) already presented, but with the "new" interpretation of the issue provided by the appellate court. Or -- and as seems likely considering the sweeping impact of this decision, and its argued divergence from similar cases in other districts -- to appeal to a higher court. Source: Napa-net.org D.C. Federal Court Judge Dismisses 401k Provider's Challenge to DOL Cryptocurrency Guidance A D.C. federal court judge dismissed a 401k provider's lawsuit challenging the DOL guidance concerning cryptocurrency investments. In his ruling, the judge found that DOL guidance was not subject to judicial review, and the 401k provider lacked standing to file suit. Source: Hallbenefitslaw.com »» Click here for more Court and Other Legal Issues Insight: Studies, Research, and White Papers Seven Steps Toward a New Paradigm for Retirement The author suggests that the conventional wisdom on retirement is misguided. The approaching exhaustion of the Social Security and Medicare trust funds has stoked anxiety over the disappearance of these programs' support, while dire statistics about Americans' lack of retirement assets have propelled a belief of chronic under-saving. In the aggregate, neither view is quite right, and this mischaracterization has unearthed calls by some to dismantle the entire system. While the current system has serious flaws, however, it is still worth saving. To do so, policymakers need both an accurate assessment of the system's shortfalls and a menu of plausible options to improve them. Source: Georgetown.edu Automatic Enrollment, Reenrollment, and Retirement Outcomes Millions of Americans who otherwise might not be saving for retirement have been enrolled by their employers into their 401k plans through automatic enrollment, and it has transformed the way that many Americans save for retirement. Plan sponsors have embraced the use of automatic enrollment as a means of creating employee engagement with retirement savings and promoting healthy financial behavior. Source: Troweprice.com Third of DC Plan Sponsors Don't Expect Employees to Use Financial Wellness Programs: Survey About a third (32 percent) of defined contribution plan sponsors that currently don't use a financial wellness program say it's because they don't expect employees to take advantage of it, according to a new survey by Cerulli Associates. However, the survey also found financial wellness programs have grown to become a key component of the DC plan value chain, with close to 90 percent of recordkeepers presenting a financial wellness program. Source: Benefitscanada.com Navigating the New Age of Retirement Services Laying the foundation for long-term financial stability means more than the traditional approaches to saving for retirement. Experts and industry leaders offered perspectives in recent panel discussions at the SPARK Forum concerning ways to help participants have a well-financed retirement, through work with individuals as well as through cooperation with other parts of the industry. Source: Asppa.org Retirement Plan Contributions Slipped in 2022 Plan Sponsor Council of America is out with its latest survey of 401k plans. It finds that after record contribution rates from participants and employers in 2021, plan contributions dipped in 2022. However, although participation and contribution rates slipped, they nonetheless remain strong. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Fred Reish on the New Fiduciary Rule: Fixed Indexed Annuities Statements from the White House indicate that the DOL and the White House are concerned that fixed-indexed annuities may be inappropriately sold to participants and IRA owners in connection with recommendations to roll over benefits from plans and to transfer money from IRAs. The reaction from the insurance industry and state insurance commissioners has been immediate and strong. If the proposals become final as written, the greatest impact of the changes will likely be on insurance agents, particularly independent producers. This article covers the impact on independent insurance agents, insurance companies, and annuities. Source: Fredreish.com Three Takeaways From DOL's New Fiduciary Proposal The U.S. Department of Labor's new proposal to expand what constitutes fiduciary invest. advice under the Employee Retirement Income Security Act isn't as sweeping as a previous fiduciary rule that failed in court, but it's still an ambitious package that benefits lawyers need to be aware of, experts say. Here are three things to keep an eye on. Source: Wagnerlawgroup.com 100% of Large Retirement Plan Advisories Now Include Wealth Strategy, According to T. Rowe There's no more holding out by large retirement plan advisory firms in offering a built-in wealth strategy for clients, according to researchers at T. Rowe Price. In the Retirement Leadership Forum 2021 Aggregator Survey, all advisers reported having a built-in wealth strategy to offer participants in the plan, said Michael Doshier, a senior defined contribution adviser strategist at T. Rowe Price. Source: Planadviser.com Legislative and Washington DC House Passes Amendments Blocking DOL Fiduciary Rule The House of Representatives voted on November 15th to pass key amendments in H.R. 5894, or the Labor, Health, and Human Services, Education, and Related Agencies Appropriations Act, that would prevent the DOL from using any allocated funds for its fiduciary proposal. Source: 401kspecialistmag.com Bipartisan Bill Backs 401k Plans for Teen Workers The Helping Young Americans Save for Retirement Act, introduced by Senators Bill Cassidy and Tim Kaine, would lower the participation age of ERISA-covered defined contribution plans to 18-year-olds under certain circumstances, according to a statement released by the U.S. Senate Committee on Health, Education, Labor, and Pensions. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory DOL's Lost and Found Database Gets a Boost The SECURE 2.0 Act's creation of an online searchable lost and found database at the DOL to help American workers find lost retirement savings benefits has moved one step closer to becoming a reality. The Technology Modernization Fund -- which invests in technology projects across government, providing incremental funding, technical assistance, and oversight -- announced that it is investing nearly $3.5 million at the DOL to help establish the online registry. Source: Napa-net.org Guidance on Section 603 of the SECURE 2.0 Act Concerning Catch-Up Contributions The IRS has issued Notice 2023-62, which gives guidance on Section 603 of the SECURE 2.0 Act concerning catch-up contributions. The Notice delays the requirement in Section 603 for highly compensated individuals to make catch-up contributions on a Roth basis -- with no pre-tax option -- to qualified retirement plans effective January 1, 2024. Instead, the Notice establishes a two-year administrative transition period, during which all catch-up contributions by these individuals will satisfy the terms of Section 603, whether they are made on a Roth basis or not. Source: Hallbenefitslaw.com »» Click here for more Compliance and Regulatory Material Marketplace News Employee Fiduciary Launches a Future Value of 401k Fees Calculator NAPA Announces the 2024 Top Retirement Plan Advisors Under 40 Envestnet Launches Envestnet Retire Complete 2023 Small 401k Plan Sales at Empower Top $10 Billion
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