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All News > Fiduciary Duties

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AT&T Sued by Participants Over 2023 Pension Risk Transfer with Athene Annuity and Life
PLANSPONSOR; free registration may be required Link to more items from this source
Mar. 14, 2024

"After conducting an $8.05 billion pension risk transfer in May 2023 and offloading 96,000 of its plan participants and beneficiaries, AT&T Inc. was sued by four former participants ... The former participants ... claimed that AT&T's decision to conduct the PRT with Athene Annuity and Life Company placed its retirees in danger and that AT&T and its independent fiduciary, State Street Global Advisors Trust Co., stood to gain from the transfer. " [Piercy v. AT&T Inc., No. 24-10608 (D. Mass. complaint filed Mar. 11, 2024)]

Tags: Fiduciary Duties  •  Funding of DB Plans

Understanding Health Plan Fiduciary Duties
Savoy Link to more items from this source
Mar. 14, 2024

"Are you exercising discretion, or making a recommendation? For most benefits consultants, real discretion sits elsewhere. The employer is generally making decisions on behalf of the plan, even at your recommendation.... Is the HRA administrator performing a ministerial function, where they only act at the direction of the plan, or are they making black-and-white decisions out of a gray area?The real answer to 'are you a fiduciary' is anything but black and white, and requires a fact-specific inquiry."

Tags: Fiduciary Duties

J&J Case Practical Considerations: The Core Four ERISA Fiduciary Duties, Part 2
Newfront Link to more items from this source
Mar. 13, 2024

"[T]he class plaintiff argues J&J had the duty to ensure that decisions were made in the best interest of the plan and its participants, including reviewing the plan's prescription drug costs and taking steps from such reviews to save the plan and participants millions of dollars. If J&J is ultimately found to have breached its fiduciary duties in this area, there could be a wave of claims targeting similar situations." [Lewandowski v. Johnson & Johnson, No. 23-0671 (D.N.J. complaint filed Feb. 5, 2024)]

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

DOL Fiduciary Rule Expected This Spring
Armstrong Teasdale Link to more items from this source
[Guidance Overview]
Mar. 13, 2024

"In an unusual move, the DOL held a hearing regarding their proposed rules before the comment period had ended and received more than 19,000 comments during the comment period, which ended Jan. 2, 2024.... Many expect that, if the proposed rules are finalized, there will be challenges to the rules under the Administrative Procedures Act due to this unusual procedure."

Tags: Fiduciary Duties

Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing (PDF)
Pentegra Link to more items from this source
Mar. 13, 2024

18 pages. "More than 70% of plan sponsors say they find managing the details of their retirement plan a distraction from their core business ... Legislative compliance and fiduciary responsibilities rank high among chief retirement plan challenges ... More than 50% of plan sponsors use a professional fiduciary to outsource plan governance and oversight ... Plan sponsors judge retirement plan success by assessing participant success ... Nearly 40% of plan sponsors ensure plan success by using professional fiduciary resources ... More than 50% of plan sponsors employ a total benefits outsourcing approach."

Tags: Fiduciary Duties  •  Retirement Plan Administration

The Hy-Vee Summary Judgment Record Highlights Unfair Fiduciary Malpractice Lawsuits Against Large Plan Sponsors
Encore Fiduciary Link to more items from this source
[Opinion]
Mar. 12, 2024

"This case reinforces four key points that animate most excess fee cases: [1] We must allow plan fiduciaries to correct the record at the pleading stage when a complaint is based on false fee amounts; [2] We cannot allow complaints to use misleading benchmarks from random plans instead of real context of the entire market of what all large plans pay; [3] It is unfair to allow plaintiff lawyers to regulate fiduciary liability unless they can show a clear lack of any fiduciary process.... and [4] Recordkeeping is not commoditized for all large plans." [Rodriguez v. Hy-vee, Inc., No. 22-0072 (S.D. Iowa Mar. 7, 2024)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

The New Fiduciary Rule, Part 23: The Final Rule Has Been Sent to the OMB
FredReish.com Link to more items from this source
[Guidance Overview]
Mar. 12, 2024

"In a little over 2 months, the DOL finalized its proposed fiduciary rules ... That 2-month turnaround is very fast as compared to the usual time frames ... The OMB has up to 90 days to review rules, but this suggests that its review could be done in 45 days, give a week or two. While we know that the final rule is at the OMB, we don't know what it says or how it changed from the proposals."

Tags: Fiduciary Duties  •  Retirement Plan Investments

J&J Lawsuit Impacts Employer-Sponsored Health Plan Fiduciary Obligations
NFP Link to more items from this source
Mar. 12, 2024

"[T]he J&J plan funding is distinct from the typical funding of employer-sponsored group health plans because it is funded through a voluntary employee benefits association (VEBA).... [F]unds held in such a trust -- segregated from the employer's general assets -- are considered ERISA 'plan assets' and subject to ERISA fiduciary protections, including the duties of loyalty and prudence. As a result, certain aspects of the case, and perhaps any resulting decision, may be limited in applicability." [Lewandowski v. Johnson & Johnson, No. 23-0671 (D.N.J. complaint filed Feb. 5, 2024)]

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

Past Is Prologue: DOL Proposes to Change the Definition of 'Investment Advice' (PDF)
Groom Law Group, via The Investment Lawyer Link to more items from this source
[Guidance Overview]
Mar. 12, 2024

13 pages. "The purposes of this article are to [1] summarize the DOL's 1975 regulation and other guidance defining investment advice, [2] provide an overview of the Department's 2016 investment advice regulation, which was vacated by a federal appellate court, [3] explain changes to the Department's interpretation of its 1975 regulation in Prohibited Transaction Exemption 2020-02, and [4] discuss the 2023 Proposal."

Tags: Fiduciary Duties  •  Retirement Plan Investments

The American Airlines ESG Fiduciary Case Exposed the Problem with Mandated Proxy Voting (and More)
Fiduciary News; free registration required Link to more items from this source
[Opinion]
Mar. 12, 2024

"The core conflict arises when portfolio managers vote security proxies in a manner dictated by prioritizing political interests rather than the beneficiary's best interest. Part of the American Airlines case includes this allegation." [Spence v. American Airlines, Inc., No. 23-0552 (N.D. Tex. February 21, 2024) ]

Tags: Fiduciary Duties  •  Retirement Plan Investments - ESG

The Importance of Governance in Retirement Plans
Ferenczy Benefits Law Center Link to more items from this source
Mar. 12, 2024

"While the goal for most companies that offer self-direction of investments to their participants is to avoid liability for the returns, that avoidance only happens if certain rules are met.... [H]aving a written set of practices and procedures ensures everyone involved in the administration of the plan is on the same page.... Turnover at a company is frequently where we see breakdowns happen in plan administration. Having a solid base of governance materials in place helps train replacements and avoids these breakdowns."

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

DOL Sends Final Fiduciary Rule to OMB
Groom Law Group Link to more items from this source
Mar. 11, 2024

"On March 8, 2024, the [DOL] sent a final version of the Retirement Security Rule: Definition of an Investment Advice Fiduciary (the 'Fiduciary Rule') to the Office of Management and Budget (OMB) for review. OMB review is typically the final stage of the regulatory process before the publication of a final rule and can take anywhere from a few days to several months. Assuming a normal review process, [the authors] expect the Fiduciary Rule to be released by the end of May. The text of the Fiduciary Rule will not be publicly available until it is released by DOL or published in the Federal Register."

Tags: Fiduciary Duties

Editor's Pick A New Frontier for ERISA Fee Suits: Group Health Plans
McGuireWoods Link to more items from this source
Mar. 11, 2024

"Because fiduciaries are now required to have increased access to cost and pricing information of underlying plan benefits, considering how to use data to help evaluate and control plan costs should be top of mind for ERISA group health plan fiduciaries. Identifying the responsible fiduciaries for this function is critical as ERISA plaintiffs' firms begin using the same or similar data to support claims regarding excessive fees paid by group health plans." [Lewandowski v. Johnson & Johnson, No. 23-0671 (D.N.J. complaint filed Feb. 5, 2024)]

Tags: Fiduciary Duties  •  Health Plan Costs

Editor's Pick District Court Expands Fiduciary Liability to Cover Non-ESG Fund Managers' ESG-Related Conduct
Mayer Brown Link to more items from this source
Mar. 8, 2024

"The Court's duty of prudence analysis suggests that a plaintiff can sustain a breach claim merely by pointing to some activity of an investment manager not directly related to 'maximizing' financial benefits, and that a plan sponsor erred by not considering that activity when selecting the manager's funds.... Similar issues abound with the opinion's analysis of the duty of loyalty." [Spence v. American Airlines, Inc., No. 23-0552 (N.D. Tex. February 21, 2024) ]

Tags: Fiduciary Duties  •  Retirement Plan Investments - ESG

Lessons from a Successful ERISA Defense Against Participant Challenge to Target-Date Fund Investments
McGuireWoods Link to more items from this source
Mar. 8, 2024

"[T]he defendants demonstrated that flexPATH recommended its own TDFs only after performing an exhaustive analysis of several alternative investments ... [T]he court rejected plaintiffs' contentions that Wood Group ... needed to document the justifications for engaging flexPATH in committee meeting minutes.... These rulings underscore the importance of not just having prudent processes, but also considering how those processes are documented." [Lauderdale v. NFP Corp., No. 21-0301 (N.D. Calif. Feb. 23, 2024)]

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

DOL Enforcement Actions Serve as Strong Reminder to Plans to Exercise Fiduciary Prudence
Haynes and Boone, LLP Link to more items from this source
Mar. 8, 2024

"Common areas [for] fiduciary breaches include [1] plan sponsors failing to timely remit employee contributions to the plan, particularly for off-cycle and manually cut checks; [2] plan committees not using best practices to monitor, choose, and remove plan investments and not properly benchmarking performance and fees; and [3] plan fiduciaries relying heavily on third-party administrators to process claims without reviewing the claims letters and/or procedures being used by the third-party administrators."

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

Investment Advice to Plans and Participants and Litigation Risks
Fred Reish, Megan Hladilek, and Emily Kile-Maxwell, via American Retirement Association [ARA] Link to more items from this source
Mar. 8, 2024

"There has been a recent increase in ERISA claims filed against retirement plan advisors ... [T]his article discusses the allegations and the courts' conclusions in selected cases.... The core ERISA fiduciary duties for retirement plan advisors are the duties of loyalty and prudence. Intertwined in both duties is a responsibility to ensure that only reasonable fees are charged for the services and investments recommended or selected by the adviser. "

Tags: Fiduciary Duties  •  Retirement Plan Investments

Employers Have a Fiduciary Duty to Manage Their Prescription Drug Programs
Masuda Funai Link to more items from this source
Mar. 8, 2024

"As a major drug maker itself, certainly J&J is presumed to understand the prescription drug market and industry practices. For companies using PBMs to provide prescription drug benefits to employees and beneficiaries, this complaint must serve as a warning ... [T]his lawsuit is likely to spark significant interest into the opaque world of prescription drug plans and their pricing, which will undoubtedly lead to additional lawsuits." [Lewandowski v. Johnson & Johnson, No. 23-0671 (D.N.J. complaint filed Feb. 5, 2024)]

Tags: Fiduciary Duties  •  Prescription Drug Costs

The New Fiduciary Rule, Part 22: Can Wholesalers Become Fiduciaries?
FredReish.com Link to more items from this source
[Guidance Overview]
Mar. 7, 2024

"When a wholesaler becomes a fiduciary to a plan or an IRA, and the recommendation is made by the advisor or agent to and accepted by the IRA investor or plan fiduciary, there will likely be a prohibited transaction due to the wholesaler's firm making money on the investment or insurance product. Where a wholesaler prohibited transaction occurs, an exemption (PTE) will be needed, most likely PTE 2020-02."

Tags: Fiduciary Duties  •  Retirement Plan Investments

J&J Case Practical Considerations: The Core Four ERISA Fiduciary Duties, Part 1
Newfront Link to more items from this source
Mar. 7, 2024

"The J&J Case: ERISA Fundamentals Revisited ... The words 'fiduciary' and 'fiduciaries' are used over 150 times in the J&J complaint.... Employer fiduciary duties ... When do the ERISA fiduciary duties apply? ... The core four ERISA fiduciary duties." [Lewandowski v. Johnson & Johnson, No. 23-0671 (D.N.J. complaint filed Feb. 5, 2024)]

Tags: Fiduciary Duties  •  Health Plan Administration

Transparency: A New Litigation Risk and a Pathway to Better Plan Management
Arthur J. Gallagher & Co. Link to more items from this source
Mar. 6, 2024

"Health plan fiduciaries should heed the lessons learned by retirement plan fiduciaries during the retirement plan investment fee litigation and begin to apply them to their health plans. Such steps can help plan fiduciaries meet their obligations and provide clear rules and processes in selecting and monitoring plan service providers and their fees, and if properly done, could protect the plan, sponsor, and fiduciaries. [This article discusses] steps toward achieving that goal."

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

Another 401(k) Plan Sponsor Faces Novel Suit Regarding Its Use of Forfeiture Funds
Jones Day Link to more items from this source
Mar. 6, 2024

"This is the seventh lawsuit filed against a plan sponsor, all filed by the same plaintiffs' firm in federal district courts throughout California. In some of the prior lawsuits, plaintiffs have alleged that the governing plan documents explicitly provided that plan sponsors could use forfeitures to lower contributions owed to the plans. The Tetra complaint is devoid of such allegations." [Yagy v. Tetra Tech, Inc., Case No. 24-1394, (C.D. Cal. complaint filed Feb. 21, 2024)]

Tags: Fiduciary Duties  •  Retirement Plan Design

Enhancing Core Menus to Help Get 401(k)s in Better Shape for Retirement (PDF)
PGIM DC Solutions Link to more items from this source
Mar. 4, 2024

29 pages. "This paper uses data from 8,271 401(k) plans to explore where asset class coverage gaps exist in core menus and quantifies the portfolio implications associated with the gaps. Equity funds clearly dominate core menus today ... which can make it difficult to build efficient conservative (i.e., retirement) portfolios and may lead to excess risk-taking among participants (i.e., if the participant follows a naïve allocation strategy or chases returns)"

Tags: Fiduciary Duties  •  Retirement Plan Investments

J&J Lawsuit Shines Spotlight on Welfare Plan Fiduciary Duties
Morris, Manning & Martin, LLP Link to more items from this source
Mar. 1, 2024

"[P]lan sponsors should take a proactive and critical look at their welfare plan governance and administration to ensure that fiduciary duties are being satisfied ... [1] Establish and maintain a health and welfare plan committee.... [2] Review and update committee documents and committee composition.... [3] Conduct regular fiduciary training ... [4] Monitor service providers; review and pay reasonable fees.... [5] Follow plan documents.... [6] Fiduciary liability insurance.... [7] Consider cybersecurity obligations.... [8] Highlight your wins."

Tags: Fiduciary Duties  •  Health Plan Administration

401(k) Fee Suits Tossed for Pleading Deficiencies: A Positive Trend for Plan Fiduciaries
Faegre Drinker Link to more items from this source
Mar. 1, 2024

"[D]ismissals for failure to include appropriate comparator plans are a positive trend for 401(k) plan fiduciaries in the Seventh Circuit, and has gained steam in the Sixth and Eighth Circuits as well. In these jurisdictions, plaintiffs are on notice that their complaints must provide allegations of meaningful comparator plans of similar size that received similar recordkeeping services to the plan at issue. Complaints lacking this specificity may face an early exit from litigation."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

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