Newsletter for December 4, 2023
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In This Issue
Fiduciary and Plan Governance
Crypto Remains Massive Compliance Risk for Retirement Fiduciaries
On November 20, the Securities and Exchange Commission charged Kraken, a crypto exchange, for operating as an unregistered securities exchange. This prompted Wagner Law Group partner Kimberly Shaw Elliott to caution fiduciaries of the risks of crypto assets, given their compliance issues. The Department of the Treasury issued a record-breaking multi-billion dollar fine against Binance Holdings Ltd., a crypto exchange, the next day, further compounding the fiduciary risks of crypto assets.
Source: Planadviser.com
How to Make Your Retirement Plan Committee Better
To function as a successful 401k or 403b plan sponsor, you need a retirement plan committee that helps your company organize and administer your plan. While ERISA does not require the committee itself, committee members can keep your organization in compliance with all established regulations. To help you get the most out of your retirement plan committee, here are several strategies for your consideration. Implementing any or all of them could enhance your retirement plan committee's performance.
Source: Planpilot.com
»» Click here for more Fiduciary and Plan Governance Material
Insight: Studies, Research, Analysis, and White Papers
How to Plan, Craft Successful Participant Communication
Plan sponsors view communicating information to retirement plan participants as a critical function to connect employees to benefits, educate participants on the offerings, and help them properly use their benefits. Here plan sponsors and communications professionals examine the importance of reaching out to participants and how it can improve retirement savings.
Source: Plansponsor.com
Employers Overestimate Employee Retirement Confidence
It's become clear there is a disconnect between employers and their employees surrounding retirement readiness. A new study from Voya Financial found that while the vast majority of plan sponsors (87%) think their participants are somewhat or very prepared for retirement, only 63% of participants feel the same.
Source: 401kspecialistmag.com
»» Click here for More Studies, Research, and White Papers
Items of Special Interest to Service Providers
Fred Reish on the New Fiduciary Rule: The Fiduciary Definition of Fiduciary
This post discusses the "fiduciary acknowledgment" definition of fiduciary invest. advice in the DOL's proposed fiduciary regulation. More specifically, the proposed regulation says that a person will be an ERISA and Code fiduciary if "The person making the recommendation represents or acknowledges that they are acting as a fiduciary when making investment recommendations."
Source: Fredreish.com
A Guide to the DOL's Retirement Security Rule Proposal
The DOL's new "retirement security rule" package is the latest chapter in an almost 15-year effort by the DOL to amend the five-part test in its 1975 regulation for determining whether a person is a "fiduciary" by providing invest. advice for a fee. Very generally speaking, the Proposed Rule would significantly expand the circumstances under which a person could be treated as providing invest. advice that is subject to ERISA's fiduciary standards.
Source: Erisapracticecenter.com
Adviser Voices: How to Structure a Retirement Plan Advisory
With the evolving role of advisory firms in handling increased responsibilities related to fiduciary duties and employee outcomes, a firm's organizational structure is crucial to allow for optimal results. Here, three plan advisers share their thoughts on how a team can be structured to effectively serve clients and grow its business.
Source: Planadviser.com
Plan Advisers Will Play Key Role in Future of In-Plan Annuities: LIMRA
Plan advisers will play a key role in in-plan annuity options' trajectory in the next 12 months, according to research by trade group LIMRA. An estimated nine out of 10 defined contribution retirement plans do not offer participants an in-plan annuity option, according to LIMRA. That has been the case for years despite a push from insurance providers for in-plan options, but 2024 may finally be a tipping point, the insurance trade group wrote in its report.
Source: Planadviser.com
403b Plans
Can a Plan Sponsor Limit Hardship Distributions?
The article answers this question, "Our 403b plan currently allows for hardship distributions, but the number of such distributions has been on the uptick in recent years. We don't wish to eliminate hardship distributions, but is there any way we can restrict their availability?"
Source: Plansponsor.com
»» Click here for More 403b Material
Court and Legal
Bed Bath & Beyond, Bankruptcy, and Fiduciary Litigation
In September 2023, former employees of Bed Bath & Beyond sued members of the company's 401k committee, the committee responsible for the prudent management of the company's 401k plan. The former employees allege they lost more than $5 million following the company's bankruptcy filing in April 2023, a loss the committee could have avoided. Here is a cautionary tale of Bed Bath & Beyond's bankruptcy.
Source: Woodruffsawyer.com
Federal Court Tosses 401k Plan Mismanagement Suit Against Old Dominion
A federal court judge in North Carolina dismissed a lawsuit in which a former employee alleged that Old Dominion Freight Line had violated its fiduciary duty under ERISA by mismanaging its workers' 401k plan. Specifically, ex-employee Harvey Davis claimed that Old Dominion failed to substitute cheaper investment funds for more expensive options, thus violating the duty of prudence under ERISA and failing to monitor the plan adequately.
Source: Hallbenefitslaw.com
A Victory for Plan Fiduciaries: The Second Circuit Clarifies the Pleading Standard for Prohibited Transaction Claims
For years, courts have struggled with the appropriate standard to apply to ERISA-prohibited transaction claims at the pleading stage. In Cunningham v. Cornell University, a case that involved a 403b defined contribution plan, the Second Circuit addressed the pleading standard necessary to sufficiently allege a party-in-interest prohibited transaction claim. The Second Circuit issued a well-reasoned opinion that may have significant implications for ERISA-prohibited transaction claims at the pleading stage.
Source: Groom.com
Tyson Foods Latest Target of Excessive 401k Fee Lawsuit
The latest big 401k excessive fee lawsuit was filed this week against Tyson Foods Inc. in the U.S. District Court for the Western District of Arkansas, where three employees brought a proposed class action accusing the Arkansas-based meat-processing giant of mismanaging its $3.2 billion 401k plan by overpaying for recordkeeping.
Source: 401kspecialistmag.com
»» Click here for more Court and Other Legal Issues
Compliance and Regulatory
IRS Issues Guidance on Pre-Approved Plans
The IRS in Revenue Procedure 2023-37 has issued fresh guidance on qualified pre-approved plans and 403b pre-approved plans which combines, conforms, clarifies, and updates rules for those plans set forth in prior revenue procedures.
Source: Asppa.org
SECURE 2.0 Removes the RMD requirement for Roth 401k Accounts
The SECURE Act 2.0 brought about significant changes to retirement planning in the United States. Among its many provisions, one notable alteration has positively impacted Roth 401k accounts, the elimination of Required Minimum Distributions.
Source: Belfint.com
The Long Wait for the Long-Term Part-Time Guidance is Over
The DOL and IRS released on Friday their proposed rules for long-term part-time employees. The proposal answers many of the burning questions since the new eligibility standards first came to be under the SECURE Act back in 2019.
Source: Seyfarth.com
»» Click here for more Compliance and Regulatory Material
Marketplace News
Aon PEP Hits $2B in Plan Assets
Nomination Period Open for 2024 Plan Sponsor of the Year Awards
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