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Retirement Plans Newsletter

November 29, 2022

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[Guidance Overview]

DOL Issues Final ESG Regs

"[A chart] summarizes the most significant changes [from] the 2021 Proposal and any modifications to these provisions in the Final Rule.... By deleting the 'may often require' language, DOL confirms that consideration of ESG factors is not a mandate. Nevertheless, it is clear that DOL views E, S and G components as having the potential to be economically significant factors that may form part of a prudent evaluation of risk and return."  MORE >>

Eversheds Sutherland


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[Guidance Overview]

'Tis the Season... to Consider ESG Investments in Your 401(k) Plan

"[T]he final rule retains the core principle that when a plan's assets include shares of stock, the fiduciary duty to manage plan assets includes the management of shareholder rights related to those shares, such as the right to vote proxies. It does make certain changes that may encourage proxy voting (rather than abstention) and clarifies that proxy voting and other exercises of shareholder rights carry the same fiduciary obligations as any other plan fiduciary activities."  MORE >>

Jackson Lewis P.C.

[Guidance Overview]

DOL Reframes ESG Investing and Proxy Voting for ERISA Fiduciaries

"With the Final Rule, the DOL intentionally takes an approach intended to achieve 'appropriate regulatory neutrality,' which could serve to insulate this rule from further regulatory ping-pong in the future.... [T]here remain open questions about how [the rule's] consideration of participant preference will be put in practice. For example, what about competing participant preferences? And how much weight will courts give to a fiduciary's consideration of participant preference when the investment is challenged as imprudent?"  MORE >>

Morgan Lewis

Nondiscrimination Testing: Next Steps If Your Qualified Plan Fails the Test

"Safe harbor plans require that a company make mandatory contributions to the plan, which sometimes makes these plans cost-prohibitive for the company.... Auto-enrollment ... does typically improve plan participation levels. However, specific verticals may find auto-enrollment unrealistic.... A nonqualified deferred compensation plan (NQDC) can offer an effective workaround to what can otherwise be a lose-lose situation."  MORE >>


401(k)ology: 'Post-Severance' vs. 'Severance' Compensation

"[S]everance pay is not based on services performed by the employee nor would it have been paid to the employee had the employee remained an employee of the employer. Severance pay is typically associated with a layoff or dismissal ... [and] is never eligible plan compensation.... Post-severance compensation is eligible compensation if it meets the timing restrictions and is an amount ... that would have been paid prior to termination had the employee continued employment with the employer."  MORE >>


Defined Contribution Solutions Look Beyond Yield for Retirement Income (PDF)

"This paper explores how low interest rates and inflation impact retirement plan investing when the goal is income generation, rather than asset growth. [The authors] examine the impact to current, prominent income-generating strategies and explore approaches to retirement income generation that have begun gaining the attention of fiduciaries and plan sponsors as new tools to help retirees."  MORE >>

Defined Contribution Institutional Investment Association [DCIIA]

401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2020 (PDF)

24 pages. "At year-end 2020, 38 percent of 401(k) plan participants were in their twenties or thirties, and 24 percent were in their forties.... Younger participants, as a group, had more than 80 percent of their 401(k) plan assets invested in equities, compared with 56 percent of 401(k) plan assets among participants in their sixties ... Overall, 94 percent of 401(k) participants had at least some investment in equities at year-end 2020."  MORE >>

Investment Company Institute [ICI]

Financial Market Upheaval Overtakes Best Intentions of ARPA

"Pension plan balance sheets improved in 2022 despite market fluctuations. Now corporate plan sponsors have to consider their funding strategy for the year ahead."  MORE >>


The 403(b) Lifecycle

"This post briefly describes each of the twelve stages of the 403(b) Lifecycle.... [It] captures a series of plan-related events that could last up to 70 or 75 years (e.g., a teacher that starts working at age 22 and lives to age 97). Research results, three 'need to know' facts, and six take-away action steps conclude this discussion."  MORE >>



ARA Presses DOL for Changes to QPAM Exemption Proposal

"[T]he Exclusive Authority Requirement ... should be modified so that it does not preclude routine business interactions.... [D]uring the one-year winding down period, the exemption should permit new transactions in existing accounts which may be required for a prudent winding down process.... [T]he DOL should provide at least 18 months for affected parties to come into compliance with the conditions of an amended QPAM Exemption[.]"  MORE >>

American Retirement Association [ARA]


Will DOL's New ESG Fiduciary Rule Change How 401(k) Plan Sponsors Pick Investments?

"Rather than relying on extensive academic studies, this new Rule represents a certain leap of faith.... Because the fiduciary duty remains the same, because the factors continue to deal with risk and return, and because, if the risk and return factors present no real difference when using the tiebreaker method, the new Rule may not matter to plan sponsors seeking to reduce their fiduciary liability."  MORE >>

Fiduciary News; free registration required

Benefits in General

Exceptional Usefulness and Quality icon Fiduciary Liability: 2022 in Review and a Look Ahead to 2023

"2022 was a year in which fiduciary insurance rates and retentions continued to increase but stabilized.... Excessive fee class actions were by far the largest drivers of the market ... [E]mployer stock class actions against public companies did not make a resurgence, while private companies continued to be targeted ... Aftermath of the Dobbs decision ... 2023: Looking ahead: [1] Defined Contribution Plan risk ... [2] Risks post the Dobbs decision ... [3] Defined Benefit Plan risks ... [4] Regulatory risks."  MORE >>

Willis Towers Watson

Executive Compensation and Nonqualified Plans

Trends in Nonqualified Deferred Compensation Plans

"Providing a competitive benefits package is [employers'] highest priority, followed by helping key employees save for retirement. The top reasons for hiring challenges are finding employees with the right skill sets and employees leaving for better pay. Retaining key employees is now the number one reason for making employer contributions."  MORE >>

Principal Financial Group

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Selected New Discussions

Filing Under DFVCP After Original 5500 Filed

"A fiscal year filer's Form 5500 return/report was due 10/31. Our office submits on the client's behalf. The client signed and returned the form timely, but the actual submission took place after 10/31. No penalty notices have been received. Is it possible to submit it again using DFVCP?"

BenefitsLink Message Boards

Do Plan Sponsors 'Sign' the Safe Harbor Notices?

"Do Plan Sponsors generally sign the Safe Harbor Notice, or do they just get sent out as applicable?"

BenefitsLink Message Boards

Can DFVC Be Elected on an Amended 5500 So as to Eliminate Already-Assessed IRS Late Penalty?

"Plan Sponsor/Administrator files 2018 5500-SF one year late (not under DFVC). Ignores IRS penalty letters. IRS now is assessing a $70,000 penalty. No DOL penalty assessment yet. Can we file an amended 2018 5500 under DFVC and get the IRS penalty abated, or is it too late?"

BenefitsLink Message Boards

Press Releases

EdgeCo Holdings Announces Launch of AmericanTCS

EdgeCo Holdings

Pinnacle Plan Design Names Amanda Iverson to Succeed Kevin Donovan as Managing Partner

Pinnacle Plan Design

Securian Financial and Qualified Plan Advisors Introduce Highly Personalized Managed Account Solution for Workplace Retirement Plans

Securian Financial Group

Last Issue's Most Popular Items

DOL Proposes Self-Correction of Delinquent Contributions and Loan Payments Under Qualified Retirement Plans

Sidley Austin LLP

IRS Releases Empty 2022 Required Amendment List


2023 Retirement Plan Compliance Calendars


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

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