On April 4th, the Department of Labor (DOL) announced that it would be delaying the applicability date of its Conflict of Interest Rule (also known as the Fiduciary Rule) by 60 days. This moves the applicability date of the rule back from April 10th to June 9th.
Next, the DOL will be considering whether to leave the rule unchanged, to revise the rule, or to rescind the rule all together. It’s unclear whether this determination can be made within 60 days or whether the DOL will pursue an additional delay in the applicability date. Continue reading
Protecting against the Self-Interest of Others for the Good of Participants
Fiduciaries of the JP Morgan Chase 401(k) Savings Plan have recently been sued by Plan participants. Listed allegations include:
- failing to monitor and evaluate the cost of investment options
- imprudently allowing the Plan’s assets to remain in various proprietary (JPMorgan) investment vehicles rather than lower fee, similar investment vehicles, and
- failing to remove fiduciaries whose performance was sub-par.
After more than six years of work, much anticipation, and monumental changes in the financial industry in preparation, the Department of Labor’s Conflicts of Interest Rule (also referred to as the Fiduciary Rule) is set to become applicable on April 10th, 2017. However, it is unlikely that this fledgling rule will ever actually see the light of day.
On October 27, 2016, the Internal Revenue Service announced the 2017 Cost-of-Living Adjustments (COLA) to the retirement plan limits.
Below is a chart outlining the COLA limits that become effective January 1, 2017, along with the two prior tax years’ limits.
A recently filed lawsuit attempts to hold plan fiduciaries to what has been an unprecedented standard until now. Previous lawsuits accused plan fiduciaries (with a slight amount of industry knowledge) of what could be considered “a no brainer”: don’t pay too much. If there is an identical or nearly identical investment option offered at a lower cost, choose the lowest cost option. If it is not feasible to switch to the lowest cost option, retain the fund but rebate revenue sharing. Simple, provided you know what you’re looking for. This new lawsuit requires fiduciaries to put more thought into the plan’s fund lineup, particularly with respect to fund expenses relative to fund performance. Continue reading
For many people August is a time of new clothes, haircuts, and school supplies. For others, it’s a time to file excessive fee lawsuits against universities with multi-billion dollar retirement plans in quick succession.
As anyone who deals with the administration of qualified retirement plans knows, mistakes happen. This is a fact that the IRS is well aware of, and the last thing that the Service wants to do is harm participants by disqualifying their company’s retirement plan. For this reason, the IRS has established the Employee Plans Compliance Resolution System (“EPCRS”). This system allows plan administrators to make voluntary corrections without risking disqualification of their plan. Continue reading
July 2018 Update:
When you’re a fiduciary of a retirement plan, understanding the basics of plan administration is one of the most critical and essential functions of your duties to oversee the plan. Below you will find information on how your plan design defines three basic compensation types that you should be aware of.
Having confidence that your plan meets compliance standards gives you the opportunity to spend your time focusing on plan performance in high impact areas, such as providing an outperforming investment lineup, lowering plan fees, and improving your workforces’ retirement readiness. Continue reading
In 2013 MassMutual was sued by a class of over 14,000 participants of its own 401(k) plan for charging the Plan excessive fees for record keeping services, among other things. The case was filed by the St. Louis based law firm Schlichter, Bogard & Denton, and was recently settled for $30.9 million. Continue reading
There are three sources of threats to any qualified plan: the DOL, the IRS, and lawsuits. Until recently, lawsuits had only been filed against plans with assets in the billions and had only been filed by Schlichter, a St. Louis-based firm. The threat of lawsuits seemed remote to small and mid-sized plans; a reality for larger plans only until just recently. On May 18, 2016, a lawsuit was filed in Minnesota by a law firm named Madia, LLC on behalf of Participants of the LaMettry’s Collision, Inc. 401k plan. The LaMettry’s plan has $9.2 million in assets. No longer can smaller plans pull the covers over their heads.
The threat of a lawsuit is now real to plans of all sizes.