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All News > Retirement Plan Investments

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Plan Advisors: Help Plan Sponsors in Fiduciary Litigation While Protecting Yourself
American Retirement Association [ARA] Link to more items from this source
Mar. 18, 2024

"Defending against fiduciary breach and related claims is time-consuming and expensive not only for the plan sponsor defendants but also for the plan's service providers. Chief among these providers is a plan's investment advisor, which likely will play a central role in the defending against the plaintiff's claims. This article explores what 3(21), or nondiscretionary, investment advisors can expect when their plan sponsor clients are sued, as well as what they can do to protect themselves and their clients and limit the cost and disruption of fiduciary litigation."

Tags: Fiduciary Duties  •  Retirement Plan Investments

The DOL's Fiduciary Proposals: The Impact on Recommendations of Annuities (PDF)
Faegre Drinker Link to more items from this source
[Guidance Overview]
Mar. 15, 2024

33 presentation slides. "The essence of the DOL's fiduciary proposals and their impact on distribution of annuities is found in: [1] The DOL's Fiduciary Proposals and the Impact on Recommendations of Annuities Retirement Security Rule: Definition of an Investment Advice Fiduciary; [2] Proposed Amendment to Prohibited Transaction Exemption 2020-02; [3] Proposed Amendment to Prohibited Transaction Exemption 84-24."

Tags: Fiduciary Duties  •  Retirement Plan Investments

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

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 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

House Advances Measure That Would Permit CITs in 403(b) Plans
Multnomah Group Link to more items from this source
Mar. 11, 2024

"[The] Retirement Fairness for Charities and Educational Institutions Act ... would allow 403(b) plans subject to [ERISA] and governmental plans to invest in CITs. SECURE 2.0 opened the door for 403(b) plans to use CITs through changes in tax-related provisions, but it was not implemented as the provisions did not include the necessary changes to the securities provisions."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Investments

Better Alternative(s): Private Investments May Improve Outcomes for Defined Contribution Plan Participants
Cambridge Associates Link to more items from this source
Mar. 11, 2024

"[This article] explains the historic role that PI allocations have had in generating strong returns for large investors with longer time horizons. Next, it lays out how target date funds (TDFs), which are professionally managed pools with long time horizons, can serve as the vehicle to provide exposure to PI, while simplifying the plan participant experience.... Lastly, it touches on keys to successful implementation of a value-generating PI program within a TDF structure."

Tags: Retirement Plan Investments

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

House Approves Amendment to Allow CITs in 403(b) Plans
American Retirement Association [ARA] Link to more items from this source
Mar. 8, 2024

"On March 7, the House of Representatives voted on an amendment to a larger bill that would allow collective investment trusts (CIT) to be included as menu options in 403(b)s.... If passed, [The Retirement Fairness for Charities and Educational Institutions Act] would ensure that 403(b) plan participants have the same opportunities to invest as other retirement plan participants."

Tags: 403(b) Plans and Annuities  •  Retirement Plan Investments

How Financial Advisors Can Navigate the Longevity Revolution
Forbes; subscription may be required Link to more items from this source
[Opinion]
Mar. 8, 2024

"The evolution of longevity is forcing those in financial advising to rewrite the playbook on retirement planning.... If we will be living longer, investment portfolios must be designed, built and optimized to sustain us over a longer period than previously planned. Beyond sustaining individuals, they need to allow them to continue to thrive, living into our 90s or even beyond. Diversification, risk management and a focus on long-term growth become even more crucial in this new landscape."

Tags: Retirement Plan Investments

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

Insurers to Assume Pension Obligations for 56,000 Verizon Retirees
PLANSPONSOR; free registration may be required Link to more items from this source
Mar. 7, 2024

"Plan sponsor Verizon Communications Inc. this month completed a $5.9 billion pension risk transfer by purchasing single-premium group annuity contracts with two insurers covering 56,000 retirees ... The group annuities, from Prudential Insurance Co. of America and RGA Reinsurance Co., will provide benefits to retirees that began receiving payments from the Verizon pension plans before January 1, 2023[.]"

Tags: Retirement Plan Design  •  Retirement Plan Investments

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

401(k) World: DCIO Managers Adjust to Fee Pressures
planadviser Link to more items from this source
Mar. 4, 2024

"Defined contribution investment-only asset managers have played a vital role in the retirement plan ecosystem as it has evolved.... But these fund managers have also faced myriad business challenges in recent years. Continued fee pressure and an uptick in shopping for the right funds has plan sponsors increasingly embracing collective investment trusts and passive strategies -- pushing out the once DCIO-dominant actively managed mutual fund."

Tags: Practice Management  •  Retirement Plan Investments

What Makes Bitcoin Unique Compared to All Other Cryptocurrencies: A Guide for Fiduciaries, Money Managers, and Regulators
Ryan P. Moulder Link to more items from this source
Mar. 4, 2024

"Within the last couple of years some employers have offered their workforce the opportunity to make defined contribution investments in various cryptocurrencies.... There is still a great misunderstanding by many in the government as well as many fiduciaries and money managers as to what makes Bitcoin unique and stand-alone compared to all other cryptocurrencies.... [This paper] discusses the history of digital cash and Bitcoin, the rules of Bitcoin and Bitcoin mining which are important to understanding why Bitcoin is distinctly different, and ... some of the key differences of Bitcoin compared to all other cryptocurrencies."

Tags: Retirement Plan Investments

What If Target-Date Funds Used Different Glide Paths
Morningstar Link to more items from this source
[Opinion]
Mar. 4, 2024

"Now that target-date funds have become the 401(k) option, they no longer need to justify their approaches. Everybody accepts their thesis that employees should invest heavily in stocks when they first begin working, then scale back over the years. The question is not why target-date funds use downward-sloping glide paths; it is why their potential rivals do otherwise."

Tags: Retirement Plan Investments

Kodak to Outsource Investment, Fiduciary Oversight of $1.2 Billion Pension Fund
InvestmentNews; subscription may be required Link to more items from this source
Mar. 1, 2024

"The company's move to disband its in-house team and shift the work to NEPC is being driven by the pension system's overfunding.... The overfunded status has soared from just over $100 million at the end of 2019 to about $1.2 billion at the end of 2022, an amount that represents more than half of Kodak's assets. That came as rising interest rates pushed down the present value of its future pension liabilities for the more than 37,000 participants that receive benefits in the long-standing program."

Tags: Retirement Plan Investments

California Governor Signs Annuity Best Interest Sales Rule Bill
ThinkAdvisor Link to more items from this source
Mar. 1, 2024

"The signing makes California the 44th state to adopt the NAIC model update, which is based on the U.S. [SEC]'s Regulation Best Interest. The model update requires sellers of annuities to act in the consumer's best interest and disclose potential conflicts of interest, but it does not require the seller to act as a fiduciary or to move away from collecting sales commissions."

Tags: Fiduciary Duties  •  Retirement Plan Investments

The New Fiduciary Rule, Part 21: Requirement to Correct Failures with PTE Conditions
FredReish.com Link to more items from this source
[Guidance Overview]
Mar. 1, 2024

"One of the conditions for obtaining the protection of either of those PTEs is an annual retrospective review and report on compliance with the requirements of the exemptions. If a failure is found to satisfy the conditions in the exemption, for example, in the review, it must be corrected."

Tags: Fiduciary Duties  •  Retirement Plan Investments

Annuities Unveiled: A Guide to the Different Types of Annuities
Morningstar Link to more items from this source
Mar. 1, 2024

"Income annuities provide the owner a steady stream of cash flows for a set period or for the rest of their life. Savings annuities are an accumulation-focused product with an account balance. While all savings annuities allow the owner to convert the account balance into a stream of cash flows, this is rarely done. These vehicles are often referred to as 'deferred annuities'[.]"

Tags: Retirement Plan Information for Employees  •  Retirement Plan Investments

New Hampshire Adopts Enhanced Safeguards for Annuity Consumers
American Council of Life Insurers [ACLI] Link to more items from this source
Feb. 29, 2024

"New Hampshire is the 43rd state to adopt the 'best interest of consumer enhancements' in the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation. These new laws and regulations also harmonize with the SEC's Regulation Best Interest. Nearly 80% of Americans now live in a state with a best interest standard for annuity sales."

Tags: Fiduciary Duties  •  Retirement Plan Investments

The Price of New York Life's 401(k) Lawsuit: $19M
InvestmentNews; subscription may be required Link to more items from this source
Feb. 28, 2024

"New York Life has agreed to pay $19 million to end a lawsuit over the company's use of its own investment products in its 401(k) plans. The agreement ... will bring to a close a three-year old case that accused the insurance company of breaching its fiduciary duty to its employees." [Krohnengold v. New York Life Ins. Co., No. 21-1778 (S.D.N.Y. Aug. 10, 2022; proposed settlement agreement filed Feb. 26, 2024)]

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

California District Court Denies Motion to Dismiss 401(k) Excessive Fee and Underperformance Claims
Proskauer Link to more items from this source
Feb. 28, 2024

"The decision is notable for illustrating how pleading standards in investment performance and excessive fee litigation vary depending on jurisdiction.... In this case, defendants could not overcome the Court's consideration of seemingly unrelated allegations to support holdings that plaintiffs plausibly alleged certain claims, or the Court's refusal to apply a 'meaningful benchmark' standard to plaintiffs' excessive fee claim." [Coppel v. Seaworld Parks & Entertainment, Inc., No. 21-1430 (S.D. Cal. Jan. 31, 2024)]

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

NFP Prevails in Fiduciary Suit Brought by Schlichter
American Retirement Association [ARA] Link to more items from this source
Feb. 27, 2024

"Litigation that involved a multiple employer plan (MEP), merging plans, a 3(38) investment advisor, a plan sponsor -- and at one point an advisor (NFP) -- has been resolved in favor of the fiduciary defendants, while reminding us of the value and importance of a prudent process in target-date fund selection." [Lauderdale v. NFP Corp., No. 21-0301 (N.D. Calif. Feb. 23, 2024)]

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

The Goldman Sachs Investment Performance Appellate Victory: How a Robust Fiduciary Process Helps Disprove the Disloyalty Claim for Proprietary Investments
Encore Fiduciary Link to more items from this source
[Opinion]
Feb. 26, 2024

"It is way too easy to bring a claim of fiduciary disloyalty, as courts give the benefit of doubt to plan participants who bring these claims. But the Goldman Sachs case shows how a prudent process of engaged and diligent fiduciaries can be used to rebut the unfounded claims of disloyalty and fiduciary imprudence on a summary judgment record. The case hopefully will give support for district court judges to grant summary judgment in more performance cases even when proof of fiduciary prudence is inherently fact intensive." [Falberg v. The Goldman Sachs Group, Inc., No. 22-2689 (2d Cir. Feb. 14, 2024)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

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