On March 12, Judge Jeremy D. Kernodle in the US DistrictCourt for the Eastern District of Texas approved a motion to vacate the Retirement Security Rule. What does that mean for retirement security?

The motion to vacate – essentially waving a judicial wand tomake it as though the regulation never existed – was unopposed by the Department of Labor.

But what does that mean for retirement plan advisors – andretirement plan advice? Is the 5-part rule still in force? Whatabout PTE 2020-02? And what about rollovers?

Nevin (Adams) and Fred (Reish) discuss and debate the “new”fiduciary landscape.

Episode Resources

RIP Fiduciary Rule: Judge Officially Strikes Down DOL Regulation

Trump Administration Moves to Drop Defense of Fiduciary Rule

Breaking! Department of Labor Releases Final Investment Advice Fiduciary Rule

Fact Sheet: Retirement Security Rule and Amendments to Class Prohibited Transaction Exemptions for Investment Advice Fiduciaries | U.S. Department of Labor

On February 3, Nevin (Adams) and Fred (Reish) met with a very special group of third-party administrators. Recorded live at the SoFi Center (home of TGL, Tomorrow’s Golf League), the podcasting pair dealt with some of the most timely and critical issues confronting retirement plan professionals at the Definiti-sponsored event.

In Part 1, we covered:

3(16)

Pooled Employer Plans (PEPs)

But in Part 2, we pivot to:

Crytpocurrency

Artificial Intelligence

Episode Resources:

Cybersecurity | U.S. Department of Labor

Tips for Hiring a Service Provider with Strong Cybersecurity Practices | U.S. Department of Labor

Settlement Struck in Consulting Actuarial Firm Data Hack

Court (Again) Rebuffs Amended Data Breach Suit

U.S. Department of Labor. “Artificial Intelligence and Worker Well-being: Principles for Developers and Employers.” Accessed August 13, 2024. In Web Archive, archived August 13, 2024. https://web.archive.org/web/20240813173652/https:/www.dol.gov/general/ai-principles

Compass: Navigating AI in Retirement Plan Administration

Top 10 Questions for Plan Committees - October Compass 10 Things [Vertical]

Data and Security: The Current Frontier https://www.napa-net.org/news/2021/6/data-and-security-current-frontier/

On February 3, Nevin (Adams) and Fred (Reish) met with avery special group of third-party administrators at an event sponsored by Definiti.

Recorded live at the SoFi Center (home of TGL, Tomorrow’sGolf League), the podcasting pair dealt with some of the most timely and critical issues confronting retirement plan professionals at the Definiti-sponsored event.

We’re talking things like:

3(16)

Pooled Employer Plans (PEPs)

Cryptocurrency

Artificial Intelligence

Episode Resources:

Things I Worry About (26): Pooled Employer Plans and DOL RFI (7) - Fred Reish

Understanding MEPs, PEPs, and PPPs: Key Insights and Resources

How PEPs Have Flourished Since Their Creation

Talking Points: A PEP-spective on Fiduciary Reviews

Winter Issue of Plan Consultant Is Now Online!

More Advisors Turning to 3(16) Fiduciary Outsourcing

Can Employers Outsource Administrative Fiduciary Responsibility?

Plan sponsors have a lot to do – and a lot to do withhelping Americans prepare for retirement – and a lot of things that help them do so. In this episode, Nevin (Adams) and Fred (Reish) share their lists of things plan sponsors should be thankful for this holiday.

There’s obviously a LOT to be thankful for, not the least ofwhich is that plan sponsors are often doing what they do for retirement planning in the midst of an array of other pressing concerns.

That said, there have been any number of innovations andevolutions over the years – and as we come to that time of the year when we’re inclined to give thanks – well, here are our lists:

- The 401(k) - how was America going to retire without it?

- ERISA 404(c) -participant directed investments safe harbor (without it, plan fiduciaries are responsible for ALL participant investment decisions (even the dumb ones)

- EGTRRA (Economic Growth Tax Relief and Recovery Act of 2001) - which, among other things, lifted the harsh contribution limits of TRA86, gave us Roth option.

- Target-date funds – making it easier for participants to benefit from professional money management.

- PPA (Pension Protection Act of 2006) – which “sanctioned” (via safe harbors) automatic enrollment and qualified default investment alternatives (QDIA) – including the afore-mentioned target-date funds. Created FLOORS, not ceilings for retirement savings.

- Index funds – helping provide a cost-effective investment structure, first via various share classes, and now via collective investment trusts.

- SECURE 2.0 (the SECURE 2.0 Act of 2022) – which provided 90+ OPTIONS for improved retirement savings that plan sponsors can choose from (or not). Lots of options in SECURE 2.0 that are OPTIONAL.

- The plaintiffs’ bar – well, some of them anyway.

- ERISA’s preemption provision – one set of federal laws that trump various state rules and regulations, and give us a single set of (admittedly complex) federal rules.

And one more – but you’ll have to listen to find out!

Happy Thanksgiving!

- Nevin E. Adams, JD

As Halloween approaches, and thoughts turn to ghosts,goblins and things that go bump in the night, Nevin (Adams) & Fred (Reish) turned their focus to things that SHOULD have the attention of (and perhaps even scare) plan fiduciaries.

Now, there are lots of things that require careful attention, selection and monitoring of plan assets and services by planfiduciaries; advisors and plan sponsors alike. But there are some things that may sneak up on even the most attentivefiduciary – things like:

Your target-date fund glidepath(s) – Is it “to”retirement or “through” retirement, is it appropriate for your participant base, and do THEY know what it is (particularly at the projected date of retirement)?

The degree of personalization in a “managed” account– How personalized is it, what data elements are considered, is the cost (relative to a target-date fund alternative) reasonable for the value provided, and who pays it? Is it structured as a qualified default investment alternative (QDIA)?

Cybersecurity – What provision(s) have your providersmade in securing participant data (particularly in view of the sample questions provided by the Labor Department), and are you prepared to deal with those questions in a DOL audit?

Participants that leave their accounts “behind” – Whatprocedures do you have in place to communicate with, and in some cases track down for distributing benefits? Are youable to appropriately track and administer required minimum distributions (RMD)?

Ignorance of fees – Do you know what fees are being paid by the plan, to whom, for what, and how?

Personal liability – Plan fiduciaries are personally liable for the actions they take (or don’t) with regard to plan administration. Traditional organizational insurance policies don’t cover that, nor does the fiduciary bond required. What provision(s) have you made to insure against that possibility?

Episode Resources

5 Things That (Should) Scare Plan Fiduciaries

Target- Date Funds

DOL: Target Date Retirement Funds - Tips for ERISA Plan Fiduciaries

Cybersecurity

DOL Cybersecurity Program Best Practices

Tips for Hiring a Service Provider with Strong Cybersecurity Practices

Cybersecurity tips for participants

Participant “Leave Behinds”

National Registry of Unclaimed RetirementBenefits: https://www.unclaimedretirementbenefits.com/

A nationwide, secure database listing of retirement planaccount balances that have been left unclaimed by former participants of retirement plans.

Retirement Savings Lost and Found Database: https://lostandfound.dol.gov/

EBSA is helping America's workers and beneficiaries searchfor retirement plans that may still owe them benefits by establishing a public Retirement Savings Lost and Found Database through the SECURE 2.0 Act of 2022. This database serves as a centralized location to find lost or forgottenbenefits and get information on how to obtain those funds.

Fiduciary Insurance

5 Dangerous Fiduciary Assumptions

The value of fiduciary liability insurance How plan fiduciaries can protect themselves from litigation Fiduciary liability insurance offers protection from claims | Invesco US

On September 15, the IRS/Treasury announced the much-anticipated final regulations on SECURE 2.0’s new limits on catch-up contributions. In this episode Nevin & Fred talk about what lies ahead.

These final regulations apply to retirement plans thatpermit participants who have attained age 50 to make additional elective deferrals that are catch-up contributions—which will now be restricted to Roth for individuals making $145,000 or more (adjusted for inflation), effective in January.

A recent Plan Sponsor Council of America survey found thatfewer than 5% of plan sponsors said they were “ready to go” with these changes, while more than 4 in 10 were “struggling with payroll logistics.” On the other hand, nearly as many (40.2%) said they expected to be ready by January 1.

Things to note:

1. This IS going to happen (some had thought/hoped there would be an extension).

2. If your plan doesn’t allow Roth, you can't do Roth catch-ups(or catch-ups for those earning more than $145k in FICA wages).

3. You don't have to allow Roth. But with this change, you might want to reconsider.

4. You’ll get more time/flexibility to correct mistakes (andthere will surely be mistakes).

In this episode we’ll also discuss the issues surrounding personalization and personal data: lawsuits challenging utilization for purposes NOT related to the plan—and massive SEC fines for allegedly inadequate disclosures.

Episode Resources:

Catch-Up “Muster”

Breaking News: IRS Releases Final Roth Catch-UpRegulations

Are Plan Sponsors Ready for Roth Catch-Ups?

IRS Grants Two-Year Delay in Roth Catch-Up Requirements

Auto-Enrollment and Roth Catch-Up Guidance Proposed byIRS

Personalization Issues

Schlichter Says Empower Improperly Used Data in 401(k)Managed Account Push

Schlichter Targets TIAA, Morningstar in Multi-Plan Suit

Empower, Vanguard Managed Account Disclosures TriggerMammoth SEC Fines

Bonus: Songs to Retire By - Fred Reish

On August 7, President Trump issued a much-anticipatedexecutive order, directing the Labor Department to (re)consider barriers to defined contribution plans accessing alternative investments. Nevin & Fred check it out – and theimplications.

More specifically, an executive order directed the Secretary of Labor to, among other things, “reexamine the Department of Labor’s guidance on a fiduciary’s duties regardingalternative asset investments in ERISA-governed 401(k) and other defined-contribution plans” – a stance widely seen as encouraging the consideration of alternative assets in defined contribution plans, including 401(k)s and 403(b)s.

The EO states as “the policy of the United States that everyAmerican preparing for retirement should have access to funds that include investments in alternative assets…”

That policy is, however, conditioned to situations “when therelevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants and beneficiaries to enhance the net risk-adjusted returns on their retirement assets.”

While the Executive Order doesn’t immediately changeanything, it sets in motion the possibility of a less restrictive regulatory view on so-called, “alternative” assets, including private markets, real estate, digital assets, and lifetime income.

The Executive Order calls out “burdensome lawsuits that seek to challenge reasonable decisions by loyal, regulated fiduciaries,” as well as “stifling Department of Labor guidance” that is says has “denied millions of Americans opportunities to benefit from investment in alternative assets.”

Episode Resources

BreakingNews: Trump Signs EO to Advance Private Market Investments in 401(k)s

LifetimeIncome Also Cited in Private Markets Executive Order

TalkingPoints: Pandora’s Box

ThingsI Worry About (12): Private Funds and 401(k) Plans - Fred Reish

DOLPulls Guidance Cautioning Fiduciaries About Private Equity in 401(k)s