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Retirement Plans Newsletter

October 14, 2021

2 New Job Opportunities 2 New Job Opportunities


[Official Guidance]

PBGC Coverage Opinion Letters Pilot Program Extended

PBGC announced that its pilot program, under which employers may request (in certain circumstances) an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC, has been extended to September 30, 2022.   MORE >>

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

DOL Proposal Would Reverse Trump ESG, Proxy Voting Rules

"Among the proposed changes is the addition of regulatory text that makes it clear that, when considering projected returns, a fiduciary's duty of prudence may often require an evaluation of the economic effects of climate change and other ESG factors on the particular investment or investment course of action. The proposed change is accompanied by three sets of examples that, depending on the facts and circumstances, may be material to the risk-return analysis."  MORE >>

American Retirement Association [ARA]

ESG Funds Easier for 401(k)s to Buy Under DOL Plan

"Sustainable funds charge an average of 0.61% of assets, compared with 0.41% for traditional peers ... ESG funds attracted $39 billion of new money in the first half of 2021, according to Morningstar. According to data that Vanguard Group publishes on the 401(k) plans it administers, 12% offer socially responsible investment vehicles to employees."  MORE >>

The Wall Street Journal; subscription may be required

Exceptional Usefulness and Quality icon Text of Federal District Court Opinion: No Breach of Fiduciary Duty by Aon in Lowe's Class Action Suit (PDF)

120 pages. "[T]he Court finds that Aon did not breach its fiduciary duty as an investment advisor to the Plan in proposing and encouraging Lowe's to change the Plan's investment structure and menu of investment options nor did it violate ERISA in its efforts to 'cross-sell' its delegated fiduciary services, which Lowe's -- a large, sophisticated corporation -- independently decided to engage. Also, the Court concludes that although the Aon Growth Fund that Aon selected as the Plan's delegated fiduciary investment manager did not generate as much investment gains as other investment options that, in hindsight, would have fared better, it did not breach its fiduciary duty to the Plan in selecting and maintaining the Aon Growth Fund as the primary actively managed 'equity' investment option in the Plan." [Reetz v. Lowe's Companies, Inc.; Administrative Committee of Lowe's Companies, Inc. and Aon Hewitt Investment Consulting, Inc., No. 18-075 (W.D.N.C. Oct. 12, 2021)]  MORE >>

U.S. District Court for the Western District of North Carolina

TIAA Faces New Managed Account Rollover Complaint Months After Settling SEC Charges

"A new lawsuit suggests the individual advisory program TIAA clients were rolled into was significantly more expensive and generated hundreds of millions of dollars in fees for TIAA -- without providing commensurate performance benefits." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. complaint filed Oct. 11, 2021)]  MORE >>


401(k) Fee Litigation: What Must a Plaintiff Allege to Survive a Motion to Dismiss?

"This term the Supreme Court is considering -- for the first time -- critical issues in defined contribution plan fee litigation, in Hughes v. Northwestern ... [A] recent decision (September 24, 2021) by the United States District Court for the Southern District of Ohio ... illustrates an issue that is also likely to be presented in Hughes: how fact-specific must plaintiffs' complaint be to survive a motion to dismiss?" [Forman v. TriHealth, Inc., No. 19-613 (S.D. Ohio Sep. 24, 2021)]  MORE >>

October Three Consulting

New 401(k) Adoption Agreements on the Horizon: Pitfalls for the Unwary

"Employers that use an IRS-approved form 401(k) or profit sharing plan document are required to adopt updated IRS-approved adoption agreements no later than July 31, 2022.... [It] is important for employers to carefully review the updated documents prepared for their plans. Simply 'rubber stamping' the updated document package from the vendor is likely to result in compliance failures and could lead to costly corrections and penalties."  MORE >>

Smith, Gambrell & Russell, LLP

403(b) Plan Participants: Getting 'Noticed'

"[T]he timing of the [universal availability] notice should be reasonably calculated, so the employee receives and has a reasonable amount of time to decide whether and how much to defer.... The purpose of the Annual Contribution Limit Notice is to remind individuals who participate in other plans during the year that they may need to provide their 403(b) plan sponsor with information about these additional contributions made outside of the 403(b) plan."  MORE >>


Why a Public Agency Might Want to Add a 401(a) Plan

"[1] Preserving the 457(b) 'deferral' limit for employee contributions.... [2] Establishing a 401(a) for a special purpose.... [3] Establishing a 401(a) for a special group or classification."  MORE >>

Best Best & Krieger LLP

Surprise for Some New 401(k) Plan Sponsors in California: $10,000 Plan Audits

"Imagine you are a California business owner ... [and that you] employ over 100 employees, such that by September 30, 2020, you were either required to have a retirement plan in place, or to begin to participate in the CalSavers program ... [Y]ou decided to adopt your own plan ... Fast forward to the end of 2021. You find out that as part of your Form 5500 filing obligations you need to engage the services of an independent qualified public accountant (IQPA) to audit plan operations and finances. The cost of these services run about $10,000.... Did things have to end up this way?"  MORE >>

E is for ERISA


DOL Proposal Clears the Way for Retirement Plans to Consider ESG

"The most important part of the proposal is more about what it would undo rather than what it would do.... [T]he proposal would lift rules that made it extremely difficult and risky for employers that wanted to use investment options with ESG considerations as default investments for workers they automatically enrolled in a qualified plan. Most people access retirement investments through these defaults when they are available, so undoing this rule is key to mainstreaming ESG."  MORE >>



Big Effect of DOL's Proposed Undoing of Trump-Era 401(k) ESG Investing Chill Is to Permit ESGs TDFs as Default Option Where BlackRock and Natixis Have Products

"As the investment industry continues to rapidly advance, the business models that presume high levels of trust like RIAs or ERISA-ruled pensions are going to win out. But now we are asking fiduciaries to raise their game, again, so that we can take on four- or five-level chess after years where one or two seemed sufficient.... Giving fiduciaries God-like ESG powers to diagnose good and bad, globally, may solve some problems but will potentially creating new ones as well."  MORE >>


Benefits in General

[Guidance Overview]

Agencies Propose SECURE Act Changes for Form 5500

"If adopted, the proposed amendment to MEP reporting would apply to plan years beginning on or after January 1, 2021. Other proposed revisions generally would apply to reporting for plan years beginning on or after January 1, 2022. The modifications affect employee pension and welfare benefit plans, plan sponsors, administrators, and service providers subject to annual reporting requirements. Comments to the proposed changes are due by November 1, 2021."  MORE >>


Employee Benefits Jobs

View job as Senior Plan Consultant
for Bidwell Consulting Services, Inc. Senior Plan Consultant

Bidwell Consulting Services, Inc.

Remote / Chico CA

View job as Senior Plan Consultant
for Bidwell Consulting Services, Inc.

View job as DB / DC Consultant
for Nova 401(k) Associates DB / DC Consultant

Nova 401(k) Associates

Remote / Houston TX / Dallas TX / Scottsdale AZ

Selected New Discussions

Incorrect Withholding of Salary Deferrals

"For the 11/27/2020 payroll, a payroll company did not withhold deferrals from a participant's bonus. Can this be corrected? The employer just realized the problem last week."

BenefitsLink Message Boards

No Payments Ever Made on 2012 Participant Loan -- Still Time to Pay It Off?

"We have a plan that we just took over as TPA. In reviewing the information we've discovered a loan that issued in August of 2012 that's still showing as active. Does not appear that any loan payments have ever been made. But it's not been defaulted. If I'm reading Rev. Proc. 2021-30 correctly -- section 6.07(3)(d) -- I can use SCP if the participant pays off the loan in full, with interest. Correct? Or do I need to use VCP?"

BenefitsLink Message Boards

Group Term Life Isn't Counted as Comp Under Sec. 3401(a), Right?

"Plan's definition for compensation is IRC section 3401(a); no other adjustments. This would exclude group term life amounts from deferrals and employer allocations, correct?"

BenefitsLink Message Boards

Press Releases

AMA Insurance Launches New Supplemental Health Insurance Program for Physician Practices

AMA Insurance

MassMutual Introduces New Employee Benefit to Help Pay Student Debt or Contribute to 529 College Saving Plans


Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Retirement Plans for Small Employers and Self-Employed


IRS [Internal Revenue Service]

Last Issue's Most Popular Items

Social Security Announces 5.9 Percent Benefit Increase for 2022, Wage Cap Will Increase as Well

U.S. Social Security Administration [SSA]

Text of DOL Proposed Regs: Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

DOL Fact Sheet on Proposed Regs for Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (PDF)

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587.

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