Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Sr. Retirement Plan Administrator

Tycor Benefit Administrators, Inc.
(PA)

Tycor Benefit Administrators, Inc. logo

DB/DC Administrator

Primark Benefits
(Remote / San Mateo CA)

Primark Benefits logo

Regional VP of Sales

The Retirement Plan Company
(Remote / AZ / CA / CO / MN / MO / OR / WA)

The Retirement Plan Company logo

Retirement and Executive Compensation Consultant

Retirement Learning Center
(Remote / Brainerd MN)

Retirement Learning Center logo

Senior Consultant

Pentegra
(Remote / Putnam Valley NY)

Pentegra logo

Retirement Plan Administrator

Nicholas Pension Consultants
(Remote)

Nicholas Pension Consultants logo

Director of Member Services, Member/ Employer Experience

Orange County Employees Retirement System
(Santa Ana CA)

Orange County Employees Retirement System logo

401(k) Plan Administrator

Abacus Retirement Solutions, LLC
(Remote / Albuquerque NM)

Abacus Retirement Solutions, LLC logo

View More Employee Benefits Jobs

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

News

All News > Fiduciary Duties

Get this news and more in our free daily email newsletters.
Why the BlackRock Investment Imprudence Cases Are Implausible and Should Be Dismissed Under the Federal Pleading Standard
Euclid Specialty Managers Link to more items from this source
[Opinion]
Aug. 10, 2022

"After years of higher-fee plans with actively managed investment options facing imprudence challenges, this next chapter in the long war against large-plan fiduciaries represents a cynical and meritless attack against low-fee plans that must be dismissed as implausible under the federal pleading standard.... These lawsuits are manufactured imprudence claims designed to profit off the high risk and cost of defending high-stakes litigation, but that is exactly why faithful application of the pleading standard is crucial to protect fiduciaries who have done nothing wrong in their service to plan participants."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Plaintiffs in Seventh Circuit Fail to Meet Dudenhoeffer Pleading Standards in Stock Drop Case
Thomson Reuters Practical Law Link to more items from this source
Aug. 10, 2022

"Boeing delegated to the Investment Committee its authority to: [1] Invest, reinvest, and manage assets of all Boeing employee benefit plans. [2] Select and monitor investment options for the ESOP.... Boeing retained certain responsibilities under applicable securities laws and ERISA with respect to the offering of company stock under the ESOP.... [T]he Seventh Circuit held that the mere exercise of some authority over Boeing employee benefit plans did not mean that Boeing was exercising fiduciary authority over the investment choices and holdings of the ESOP." [Burke v. The Boeing Company, No. 19-2203 (7th Cir. Aug. 1, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

Best Interest Standard of Care for Advisors, Part 99: The PTE 2020-02 Requirement for an Annual Retrospective Review
FredReish.com Link to more items from this source
[Guidance Overview]
Aug. 9, 2022

"[T]he fourth condition -- the annual retrospective review -- can't be satisfied until next year, since it involves a review of the covered recommendations in 2022.... [If] the review isn't performed and the report certified as required, the financial institution (e.g., broker-dealer or RIA firm) didn't satisfy the requirements of the PTE and the relief provided by the PTE isn't available. As a result, all the covered recommendations for the year, including any rollover recommendations, would be prohibited transactions[.]"

Tags: Fiduciary Duties  •  Retirement Plan Investments

SEC Publishes Bulletin on Conflicts of Interest for Broker-Dealers and Investment Advisers
Sidley Austin LLP Link to more items from this source
[Guidance Overview]
Aug. 9, 2022

"Although formally the Bulletin cannot and does not articulate legal rules beyond the existing requirements of Reg BI and investment advisers’ fiduciary duty with respect to conflicts of interest, its interpretation of these requirements is broad, and the Staff appears to treat the two standards as identical."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Guidelines for 401(k) Fiduciaries on Mutual Fund Selection
Golan Christie Taglia Link to more items from this source
Aug. 9, 2022

"Although the courts are divided, there are some guidelines that plan fiduciaries need to consider when reviewing their plan's mix of mutual funds offered for participant investment: [1] Include index funds in your plan's investment choices.... [2] Be careful in selecting and monitoring actively managed funds.... [3] Plan fiduciaries should always select the lowest cost class of a selected mutual fund that is available."

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

Two More Plans Sued Over Offering of BlackRock Index Target Date Funds
Pensions & Investments Link to more items from this source
Aug. 8, 2022

"The lawsuits bring to eight the number of ERISA lawsuits in recent days ... against sponsors and fiduciaries alleging that they should not have retained the BlackRock Lifepath Index Funds. Plaintiffs contend that the BlackRock series had a poorer overall performance than four other popular target-date series, some of which were passive and some of which were actively managed."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Third Circuit OKs ERISA Class Action Over Broad Fiduciary Investment Claims
Mercer Link to more items from this source
Aug. 8, 2022

"The plaintiffs in this case made broad allegations that plan fiduciaries failed to implement a prudent process for selecting and monitoring investment options, resulting in excessively expensive funds across the entire lineup. The plaintiffs also alleged fiduciaries imprudently selected actively managed target-date funds instead of lower-cost index options. The three plaintiffs had collectively invested in only seven of the plan's 37 investment options, and each plaintiff invested in just one of the 13 funds in the plan's target-date series." [Boley v. Universal Health Services, Inc., No. 21-2014 (3rd Cir. Jun. 1, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

Seventh Circuit Affirms Dismissal of ERISA Stock-Drop Case
Proskauer Link to more items from this source
Aug. 8, 2022

"The Seventh Circuit recently ... [affirmed] the dismissal of claims brought by participants in the Boeing 401(k) plan, ... on grounds that [1] the fiduciary responsibilities associated with the company stock fund had been delegated to an independent fiduciary, and [2] the insider fiduciaries had no duty to disclose corporate inside information to the plan participants or the independent fiduciary.... [T]he Seventh Circuit's opinion provides helpful guidance to plan sponsors and fiduciaries that go beyond the specific circumstances presented in the case." [Burke v. The Boeing Company, No. 19-2203 (7th Cir. Aug. 1, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

Brotherston v. Commonspirit Health: An Opportunity, and a Need, to Shift the 401(k) Litigation Paradigm
The Prudent Investment Fiduciary Rules Link to more items from this source
[Opinion]
Aug. 8, 2022

"[T]he CommonSpirit decision has revived the meritless 'apples and oranges' argument regarding fiduciary prudence, even though both the Brotherston decision and SCOTUS' denial of cert discredited such an argument. As a result, the Sixth Circuit has arguably created an unnecessary divide within the circuits.... [However,] the Sixth Circuit may have actually provided a valuable opportunity to provide more certainty for plan sponsors and to clarify the guidelines going forward for 401(k)/403(b) administration and litigation." [Smith v. CommonSpirit Health, No. 22-5964 (6th Cir. Jun. 21, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

Fiduciary Litigation Update, August 2022 -- Fees, Cybertheft, and Mistakes in Administration
CAPTRUST Link to more items from this source
Aug. 3, 2022

"[T]he Sixth Circuit has affirmed dismissal of a suit alleging overpayment of fees and improper use of actively managed funds.... [C]yberthieves managed another theft of plan assets from a plan administered by Alight.... A lawsuit seeking recovery of the stolen funds followed." [Smith v. CommonSpirit Health, No. 22-5964 (6th Cir. Jun. 21, 2022); Disberry v. Employee Relations Committee of the Colgate-Palmolive Company, Alight Solutions, LLC, and the Bank of New York Mellon Corporation, No. 22-5778 (S.D.N.Y. complaint filed Jul. 7, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Administration

Citigroup and Stanley Black and Decker Fiduciaries Accused of Fiduciary Malpractice for Choosing Morningstar's Top-Rated BlackRock Target Date Funds
Euclid Specialty Managers Link to more items from this source
[Opinion]
Aug. 2, 2022

"In both lawsuits, Miller Shaw flips the script of the typical excessive fee lawsuit by alleging that the respective plan fiduciaries 'chased the low fees' charged by the BlackRock index target-date funds and saddled the plans with purportedly inferior returns compared to other target-date funds. The complaints are filled with charts ... implying that Morningstar validates their fiduciary malpractice claims. But they leave out the most important chart in the entire Morningstar survey -- the one that identifies the very same BlackRock target-date funds as the number one rated target-date funds in the 2022 Morningstar survey."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Best Interest Standard of Care for Advisors, Part 98: How PTE 2020-02 Impacts Advice to IRAs
FredReish.com Link to more items from this source
[Guidance Overview]
Aug. 2, 2022

"This article discusses both the consequences of a recommendation to transfer an IRA from another firm and the consequences of investment advice to an IRA that involves a conflict of interest."

Tags: Fiduciary Duties  •  IRAs

Who Should Be Trustee of Your 401(k) Plan?
E is for ERISA Link to more items from this source
July 29, 2022

"The first consideration is whether or not to choose an institutional or third-party trustee such as a bank or trust company.... Start-up and smaller plans often select an individual who is an executive or owner of the company sponsoring the plan to serve as plan trustee.... Whether an individual or board committee carries out plan trustee functions, the individual(s) serving in this role should commit to introductory and ongoing fiduciary training."

Tags: Fiduciary Duties  •  Retirement Plan Design

Sixth Circuit: Retail vs. Institutional Share Class Claim Cannot Be Dismissed on Motion
October Three Consulting Link to more items from this source
July 29, 2022

"It appears, in the Sixth Circuit at least, that plan fiduciaries will be open to litigation, which they will not be able to dispense with on a motion to dismiss if they select (for the plan's fund menu) retail share classes, where institutional share classes would be available to them in that plan." [Forman v. TriHealth, Inc., No. 21-3977 (6th Cir. Jul. 13, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Best Interest Standard of Care for Advisors, Part 97: The SEC Requirements for Rollover Recommendations
FredReish.com Link to more items from this source
[Guidance Overview]
July 28, 2022

"While most of the focus of the literature about rollover recommendations has been on the DOL's fiduciary interpretation and PTE 2020-02, the SEC has, for the most part, harmonized its best interest/fiduciary requirements for rollover recommendations with those of the DOL. This article discusses the two-part harmony between the agencies, and the areas of disharmony."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

Private Equity in 401(k) Plans? Why Bother?
Alicia Munnell, via MarketWatch Link to more items from this source
[Opinion]
July 28, 2022

"While private equity -- unlike Bitcoin -- passes the threshold test under ERISA of being a generally acceptable asset class to a broad group of investors, ... it is too opaque for most 401(k) fiduciaries to perform appropriate due diligence.... Moreover, it takes years for returns to be realized, and participants who leave early will have paid higher fees for nothing. Private equity simply adds unnecessary risk to retirement saving."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Broker-Dealer Compliance with PTE 2020-02: Mitigating Conflicts of Interest
Faegre Drinker Link to more items from this source
[Guidance Overview]
July 27, 2022

"While there are a variety of mitigation techniques that can be used for different types of conflicts, the following two elements need to be part of mitigating every type of conflict: [1] an appropriate best interest process for developing the recommendation; and [2] supervision of the proper implementation of that process."

Tags: Fiduciary Duties  •  Retirement Plan Investments

TriHealth, the CommonSpirit Sequel: How and When Are Retail-Fee Share Classes Justified in Large Institutional Plans?
Euclid Specialty Managers Link to more items from this source
July 27, 2022

"[A recent decision by the Sixth Circuit] addresses this critical issue that was missing in the CommonSpirit case, concluding affirmatively that it does state a plausible claim under ERISA to allege that plan fiduciaries invested in more expensive mutual fund shares when shares with the same investment strategy were available at lower costs. This is a common issue for many plans, and remains the single most important priority for fiduciaries of large defined contribution plans as long as investment providers keep pushing higher-fee share classes on unsuspecting institutional plans." [Forman v. TriHealth, Inc., No. 21-3977 (6th Cir. Jul. 13, 2022)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

Text of DOL Proposed Amendment to Prohibited Transaction Class Exemption 84-14 (QPAM Exemption)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] Link to more items from this source
[Official Guidance]
July 26, 2022

99 pages. "[T]his amendment to the QPAM Exemption [would]: [1] require a one-time notice to the Department that a QPAM is relying upon the exemption, [2] require up-front terms in a written management agreement that apply in the event of ineligibility, [3] update the list of crimes in current Section I(g) to explicitly include foreign crimes that are substantially equivalent to the listed crimes, [4] expand the circumstances that may lead to ineligibility, [5] provide a one-year winding-down period to help Plans avoid or minimize possible negative impacts of changing QPAMs or adjusting their asset management arrangements when a QPAM becomes ineligible, and [6] instruct entities applying for individual exemption relief based on ineligibility under Section I(g) to review the Department's most recent individual exemptions involving Section I(g) ineligibility with an expectation that similar conditions will be required if an exemption is proposed and granted.

"The amendment also would: [1] make a clarifying revision to Section I(c) that specifies that the terms of the transaction, commitments, investment of fund assets, and any corresponding negotiations are the sole responsibility of the QPAM; [2] increase the asset management and equity thresholds in the QPAM definition in Section VI(a) commensurate with changes in the Consumer Price Index since 1984; and [3] add a standard recordkeeping provision in new Section VI(t)."

Tags: Fiduciary Duties  •  Retirement Plan Investments

DOL Proposes Amendment to QPAM Exemption to Protect Benefit Plans, Participants, and Beneficiaries
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] Link to more items from this source
[Guidance Overview]
July 26, 2022

"The amendment would protect plans and their participants and beneficiaries by: [1] Addressing perceived ambiguity as to whether foreign convictions are included in the scope of the exemption's ineligibility provision. [2] Expanding the ineligibility provision to include additional types of serious misconduct. [3] Focusing on mitigating potential costs and disruption to plans and IRAs when a QPAM becomes ineligible due to a conviction or participates in other serious misconduct. [4] Updating asset management and equity thresholds in the definition of 'Qualified Professional Asset Manager.' [4] Adding a standard recordkeeping requirement that the exemption currently lacks. [6] Clarifying the requisite independence and control that a QPAM must have with respect to investment decisions and transactions."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Expected Retirement Law Changes May Spark ERISA Suits (PDF)
King & Spalding, via Law360 Link to more items from this source
July 26, 2022

"Collective investment trusts, or CITs, and 403(b) plans have played recurring -- though separate -- roles in the surge of excessive fee lawsuits that have been filed against retirement plan fiduciaries over the past decade and a half. Congress is poised to pass bipartisan retirement legislation that could bring these two currents together to form a new wave of litigation[.]"

Tags: Fiduciary Duties  •  Retirement Plan Investments

The Retirement Plan Data Privacy Dilemma
WealthManagement.com Link to more items from this source
[Opinion]
July 25, 2022

"[We] need a much more nuanced way of thinking of plan data than we might expect from class action plaintiff lawyers.... As an industry, we need a legal framework that respects the duties fiduciaries owe participants, respects the privacy needs of participants, allows participants to use their own information without derailing plan administration, and allows data to be used to improve outcomes through better financial wellness solutions."

Tags: Fiduciary Duties  •  Retirement Plan Administration

Sixth Circuit Upholds Dismissal of Plaintiff's Claim Based on Use of Actively Managed TDF
October Three Consulting Link to more items from this source
July 25, 2022

"[T]he Sixth Circuit upheld a lower court decision dismissing plaintiff's claim on these issues, finding that: [1] There is nothing imprudent about actively managed funds per se ... [2] Simply pointing (retrospectively) to underperformance is not enough to state a claim ... [3] It is generally not appropriate (in attempting to show imprudence) to compare the performance of actively managed funds to index funds because they have different goals and strategies[.]" [Smith v. CommonSpirit Health, No. 22-5964 (6th Cir. Jun. 21, 2022)]

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

Sixth Circuit Upholds Dismissal of Some Investment Fee and Performance Claims But Allows Mutual Fund Share Class Claim to Proceed to Discovery
Proskauer Link to more items from this source
July 22, 2022

"[T]he Court held that [plaintiffs' excessive fee] claims failed because plaintiffs failed to plead that these fees were high relative to the services provided or that the fees could not be justified by the plan's strategic goals.... But the Sixth Circuit reversed as to the share class claim, holding that plaintiffs stated a plausible claim of imprudence related to TriHealth's failure to offer the cheapest share class for certain mutual funds." [Forman v. TriHealth, Inc., No. 21-3977 (6th Cir. Jul. 13, 2022)]

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

DOL's Rules on Rollover Advice Now Fully in Effect
Willis Towers Watson Link to more items from this source
[Guidance Overview]
July 20, 2022

"While aspects of the rule were already in effect, now advisors must also provide the mandated written explanation to rollover clients of the specific reasons as to why the investment professional and/or financial institution believe that the rollover is in the client's best interest, or else face substantial potential liability. This exposure is likely to trigger coverage under professional liability (E&O) policies, as opposed to fiduciary liability policies which protect plan sponsors."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

© 2022 BenefitsLink.com, Inc.