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News

All News > Fiduciary Duties

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Lawsuit Aims to Derail DOL Rule on ESG Considerations for Retirement Plans
planadviser Link to more items from this source
Jan. 30, 2023

"Twenty-five states with Republican attorneys general, two oil-services companies and an oil and natural gas advocacy group filed a lawsuit ... seeking to prevent and overturn [the DOL] rule permitting environmental, social and governance considerations in retirement investing.... The lawsuit claims the rule oversteps the [DOL's] statutory authority under [ERISA] and seeks a preliminary injunction against it." [Utah v. Walsh, No. 223-00016, (N.D. Tex. complaint filed Jan. 26, 2023)]

Tags: Fiduciary Duties  •  Retirement Plan Investments - ESG  •  Retirement Plan Policy

Coalition Sues to Stop ESG Rule
American Retirement Association [ARA] Link to more items from this source
Jan. 27, 2023

"In addition to the 24 states[, other plaintiffs include ... Liberty Oilfield Services LLC [which] sponsors a defined contribution 401(k) plan for its employees ... [The plaintiffs[ argue that the '2022 Investment Duties Rule contravenes ERISA's clear command that fiduciaries act with the sole motive of promoting the financial interests of plan participants and their beneficiaries'[.]" [Utah v. Walsh, No. 223-00016, (N.D. Tex. complaint filed Jan. 26, 2023)]

Tags: Fiduciary Duties  •  Retirement Plan Policy

Fiduciary Considerations for an Expanding U.S. Pension Risk Transfer Market (PDF)
Ivins, Phillips & Barker Link to more items from this source
Jan. 27, 2023

"The key is managing the natural conflict between a company's settlor role and the plan fiduciary's role. The business goal is for a cost-effective and swiftly executed annuity purchase, and the fiduciary's goal is to select a safe and secure annuity. To resolve the competing goals, the plan fiduciary must have a carefully crafted fiduciary process."

Tags: Fiduciary Duties

Themes in 401(k) Prudence Litigation: Standing and 'Meaningful Benchmarks for Comparison'
October Three Consulting Link to more items from this source
Jan. 26, 2023

"Two recent decisions ... granting defendants' motions to dismiss in ERISA prudence litigation illustrate emerging themes in these cases: challenges to the standing of plaintiffs who have not actually invested in the funds (or in one case, were not participants in the plan) being targeted; and challenges to the adequacy of the comparators whose allegedly superior performance (or lower cost) is used to 'infer' imprudence." [Singh v. Deloitte LLP, No. 21-8458 (S.D.N.Y. Jan. 13, 2023); Locascio v. Fluor Corp., No. 22-0154 (N.D. Tex. Jan. 18, 2023)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Update in ERISA Litigation Involving Breaches of Fiduciary Duty Claims
Littler Link to more items from this source
Jan. 25, 2023

"[C]ourts are recognizing the different purposes and glidepaths of actively managed and passively managed funds, and that the long-term nature of 401(k) investing means both types of funds can (or even should) be offered as a prudent response to customer demand.... Second, courts are viewing with more skepticism imprudent recordkeeping fee claims based upon nothing more than a comparison to the market average.... Finally, it appears that courts are willing to recognize claims of imprudence sufficient to survive a Rule 12(b)(6) challenge where the complaint includes an allegation that the plan continued to offer the retail share class of a fund when the institutional share class was available."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Editor's Pick New Questions Arise Concerning the Extent of Liability for Plan and Service Provider Following 'Heinous' Plan Participant Identity Theft
The Wagner Law Group Link to more items from this source
Jan. 25, 2023

"A recent opinion denying a third party administrator and plan fiduciary's motion to dismiss, in the Southern District of New York not only widened the scope of liability for potential ERISA defendants in actions seeking to recover ERISA fraudulent distributions, but it also made new legal determinations that, if followed by other courts, will have an impact on future suits made by plan participants seeking to recover lost retirement plan money."  [Disberry v. Employee Relations Committee of the Colgate-Palmolive Company, No. (S.D.N.Y. Dec. 16, 2022)]

Tags: Fiduciary Duties

Will the Tenth Circuit Court of Appeals 'Fix' the Ongoing 401(k) SNAFU?
The Prudent Investment Adviser Rules Link to more items from this source
[Opinion]
Jan. 23, 2023

"A case is currently pending in the 10th Circuit Court of Appeals involves many of the same issues that were in Brotherston, specifically the 'apples and oranges' argument and the issue of whose has the burden of proving causation in 401(k) actions.... This case is a perfect example of how some courts are improperly confusing the two distinct stages of pleading and proof of causation." [Matney v. Barrick Gold of N. Am., Inc., No. 20-275 (D. Utah Apr. 21, 2022; recon. denied Jun. 21, 2022; on appeal to 10th Cir. No. 22-4045)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

Missouri Bill Would Modify Duties of Public Employee Retirement System Fiduciaries
National Tax-Deferred Savings Association [NTSA] Link to more items from this source
Jan. 19, 2023

"[SB 436] provides that an investment fiduciary [shall] discharge his or her duties in the interests of the participants in a public employee retirement system and their beneficiaries exclusively to [1] provide financial benefits and [2] pay reasonable expenses for administering the system."

Tags: Fiduciary Duties  •  Local Regulation  •  State and Local Government Plans

Booz Allen Hamilton and Capital One Financial Fight ERISA Target-Date Lawsuits Again
Pensions & Investments Link to more items from this source
Jan. 17, 2023

"The companies are defendants in 11 virtually identical ERISA lawsuits against sponsors -- including Microsoft and Citigroup -- accusing them of keeping the BlackRock LifePath Index Fund, whose performance lagged four other target-date series over certain time periods."

Tags: Fiduciary Duties  •  Retirement Plan Investments

The Key Fiduciary Liability Storylines of 2022
Euclid Specialty Managers Link to more items from this source
Jan. 10, 2023

"The risk environment for fiduciaries of America's employee benefit plans continues to heighten, as creative and enterprising plaintiff lawyers discover new ways to engineer fiduciary risk for plan fiduciaries in America's judicial system. This past year, politicians and regulators have added further uncertainty and risk for plan fiduciaries. [This article provides] a summary of the key fiduciary liability stories from the past year, and the implications for what might lie ahead in 2023 and beyond."

Tags: Fiduciary Duties

District Court Permits Partial Jury Trial in Eversource Energy 401(k) Dispute
Faegre Drinker Link to more items from this source
Jan. 9, 2023

"[The District Court judge found] that the plaintiffs' demand for Eversource to 'make good' any losses caused by the alleged breach constituted a legal, rather than equitable, remedy and therefore could be submitted to a jury." [Garthwait v. Eversource Energy Co., No. 20-00902 (D. Conn. Dec. 07, 2022)]

Tags: 401(k) Plans  •  Fiduciary Duties

Prudent Practices for Retirement Income Solutions (PDF)
Broadridge Fi360 Solutions Link to more items from this source
Jan. 6, 2023

38 pages. "Retirement savings plans were created to help the masses live long lives in relative prosperity after they've stopped working. With fewer defined benefit plans available and lifespans increasing, concerns around running out of income in retirement have meaningfully increased. This handbook was created to help expand retirement plan participants' access to, and consideration of, retirement income solutions."

Tags: Fiduciary Duties  •  Retirement Plan Design  •  Retirement Plan Investments

PTE 2020-02: Retrospective Review and Correction of Compliance Failures, Part 1
FredReish.com Link to more items from this source
[Guidance Overview]
Jan. 6, 2023

"The next step in compliance with the DOL's PTE 2020-02 is to conduct the annual retrospective review for 2022 and to reduce the review to a written report to be signed by a 'senior executive officer.' The review and report must be completed within 6 months after the end of the year.... To avoid prohibited transaction consequences, [any] failures must be corrected within 90 days of discovery and reported to the DOL within 30 days of correction."

Tags: Fiduciary Duties

DOL's Final Rule Gives ERISA Fiduciaries Green Light to Consider ESG Factors When Selecting Investments
Hunton Andrews Kurth LLP Link to more items from this source
[Guidance Overview]
Jan. 6, 2023

"The 2022 Final Rule removes the emphasis on the pecuniary factors in selecting ESG investments and is intended to provide clarity on how ERISA's fiduciary duties of prudence and loyalty apply to selecting investments and investment courses of action and exercising shareholder rights such as proxy voting. The 2022 Final Rule will be effective January 30, 2023, except for a delayed applicability until January 30, 2024 for certain proxy-voting provisions[.]"

Tags: Fiduciary Duties  •  Retirement Plan Investments - ESG

District Court Dismisses 403(b) ERISA Claim Against Employer, But Not Plan’s Adviser
planadviser Link to more items from this source
Jan. 6, 2023

"The [plan] sponsor, a Texas counseling service, was protected by a safe harbor provision ... Peveto [the plan's manager] asserted it was not a plan fiduciary and merely provided investment advice, and was therefore also not liable under ERISA.... [The judge] found that there was a factual dispute ... [therefore] the case must continue for Peveto." [Roton v. Peveto Financial Group, LLC and Legacy Counseling Center, Inc., No. 20-3569 (N.D. Tex. Dec. 29, 2022)]

Tags: 403(b) Plans and Annuities  •  Fiduciary Duties

ESOP Plan Faces Retirement Records Lawsuit
PLANSPONSOR; free registration may be required Link to more items from this source
Jan. 6, 2023

"When a former worker ... sought distribution of his vested and accrued retirement assets, the firm said it had no record of his individual account." [Rajpurohit v. Becton, Dickinson and Company Savings Incentive Plan, No. 22-7612 (D.N.J. complaint filed Dec. 30, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Administration

DOL Regulatory Agenda, Fall 2022, Including Employee Benefit Items
U.S. Department of Labor [DOL] Link to more items from this source
[Official Guidance]
Jan. 5, 2023

Benefits-related items from EBSA and from the Wage and Hour Division (WHD) (changes from the Fall 2021 DOL Regulatory Agenda are noted):

Prerule Stage

  • Requirements Related to Advanced Explanation of Benefits and Other Provisions Under the Consolidated Appropriations Act, 2021
  • Improving Participant Engagement and Effectiveness of ERISA Retirement Plan Disclosures
  • Pooled Employer Plans

Proposed Rules

  • Improvement of the Form 5500 Series and Implementing Related Regulations Under ERISA
  • Definition of the Term 'Fiduciary'
  • Provider Nondiscrimination Requirements for Group Health Plans and Health Insurance Issuers in the Group and Individual Markets
  • Mental Health Parity and Addiction Equity Act and the Consolidated Appropriations Act, 2021
  • Short-Term Limited Duration Insurance; Update
  • Coverage of Certain Preventive Services Under the [ACA]
  • Definition of 'Employer' under Section 3(5) of ERISA -- Association Health Plans (New)
  • Independent Dispute Resolution Operations (New)

Final Rules

  • Pension Benefit Statements -- Lifetime Income Illustrations
  • Implement SECURE Act and Related Revisions to Employee Benefit Plan Annual Reporting on the Form 5500
  • Amendment of Abandoned Plan Program
  • Prohibited Transaction Exemption Procedures
  • Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement (New)

Tags: Fiduciary Duties  •  Health Plan Administration  •  Reporting to Government Agencies  •  Retirement Plan Administration  •  Retirement Plan Design

Ninth Circuit: Embezzler of ERISA Plan Lacks Standing to Sue Former Employer for Allocation of Restitution Payments
Roberts Disability Law Link to more items from this source
Jan. 4, 2023

"Colleen Lehr was a former participant in the Perri Electric, Inc. Profit Sharing Plan who was charged with embezzling money from the Plan. She was ordered to pay Perri Electric ... the amount she stole from the Plan. Appellants Colleen and Paul Lehr argued that Perri Electric should have applied the initial installment payment to the Plan and asserted a breach of fiduciary duty claim against Perri Electric. The district court granted summary judgment to the defendants on the basis that the Lehrs lacked statutory standing under ERISA. The Ninth Circuit affirmed." [Lehr v. Perri Electric, Inc., No. 19-17199 (9th Cir. Jan. 3, 2023; unpub.)]

Tags: Bankruptcy  •  Fiduciary Duties

Fiduciary Alert: New ERISA Group Health Plan Service Provider Fee Disclosures Require Plan Sponsor Attention
Krieg DeVault Link to more items from this source
[Guidance Overview]
Jan. 4, 2023

"Once a 408(b)(2) disclosure is received, it is important that fiduciaries review both the services outlined and the fees and commissions disclosed, to make a good faith determination about whether those fees and commissions are reasonable based on services provided.... [P]lan sponsors should confirm receipt of a fee disclosure from each covered service provider."

Tags: Fiduciary Duties  •  Health Plan Administration  •  Health Plan Costs

2022 Retirement Policy: Year in Review
October Three Consulting Link to more items from this source
Jan. 4, 2023

"In this review of retirement policy developments in 2022, [the authors] discuss major retirement-related legislative and regulatory initiatives and significant developments in retirement plan litigation."

Tags: Fiduciary Duties  •  Retirement Plan Design  •  Retirement Plan Policy

What to Keep on Your Radar and Some Predictions for 2023
Cohen & Buckmann, P.C. Link to more items from this source
Jan. 3, 2023

"The deadline for SECURE Act and CARES Act amendments was extended.... There is still no final word on mandatory arbitration of ERISA claims ... Fee disclosure for welfare plans -- similar to the disclosures required for pension plans -- is required.... A new health plan transparency requirement to provide internet-based price comparison tools comes into effect in 2023.... We should expect to see: ... More efforts to provide coverage for workers without employer plans.... Interest and use of telehealth will increase.... Steps will be taken to protect innocent participants whose accounts are stolen due to lax cybersecurity practices."

Tags: Fiduciary Duties  •  Health Plan Administration  •  Health Plan Design  •  Retirement Plan Administration  •  Retirement Plan Design

Does Your 401(k) Plan Offer the Best 'Cash' Option? What You Need to Know About Capital Preservation
BenefitsPro; free registration required Link to more items from this source
Jan. 3, 2023

"As capital preservation continues to be one of the few asset classes providing participants with a positive nominal rate of return, fixed account products and stable value funds have come to the forefront when fiduciaries speak with recordkeepers and investment managers. Although these may fill the 'cash' bucket of the defined contribution plan investment menu, they might better be viewed as cash-like. Many include unique terms and conditions that could prove challenging in the future."

Tags: Fiduciary Duties  •  Retirement Plan Information for Employees  •  Retirement Plan Investments

DOL Warns Retirees: Watch Your Assets!
Forbes; subscription may be required Link to more items from this source
Jan. 3, 2023

"Workers about to call it a career generally have accumulated large nest eggs. Is it any wonder that this age group is most attractive to the investment industry? ... For the average person, it's very difficult to distinguish between an honest pitch and a questionable sales spiel. You can't even rely on recognizable firms because not all firms are required to follow the same strict regulations. The [SEC] and the [DOL] are trying to remedy that."

Tags: Fiduciary Duties  •  Retirement Plan Design  •  Retirement Plan Information for Employees

Colgate Participant Account Cyber Theft Case Survives Dismissal Despite 'Very Thin' Claims
Euclid Specialty Managers Link to more items from this source
Dec. 28, 2022

"[T]he Colgate court has signaled that sympathetic courts will allow fiduciary breach claims for cyber theft even when there is no evidence that the plan fiduciaries or recordkeeper failed to take reasonable steps to protect participant assets against sophisticated cyber fraud and theft. The court even gave litigation advice to the plaintiff to file an amended complaint against the recordkeeper to plead a more viable claim under a theory of common law negligence.... The court denied recordkeeper Alight's motion to dismiss -- Alight can be deemed a functional fiduciary despite the fiduciary disclaimer in its recordkeeping contract." [Disberry v. Employee Relations Committee of the Colgate-Palmolive Company, No. (S.D.N.Y. Dec. 16, 2022)] 

Tags: Cybersecurity  •  Fiduciary Duties  •  Retirement Plan Administration

District Court Narrows $750,000 Retirement Theft Lawsuit Claims
PLANSPONSOR; free registration may be required Link to more items from this source
Dec. 28, 2022

"BNY Mellon served as a plan trustee for the Colgate-Palmolive retirement plan, provided investment management services, served as custodian of the plan's assets and made payments from the plan's trust fund ... BNY Mellon was dismissed as a defendant because it did not act as a fiduciary for the plan[.]" [Disberry v. Employee Relations Committee of the Colgate-Palmolive Company, No. (S.D.N.Y. Dec. 16, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Administration

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