On October 21, the dynamic podcasting duo of Nevin (Adams) & Fred (Reish) brought their engaging, informative, and occasionally alliterative discussion to ASPPA Annual.

As one might expect from a crowd composed of the nation's leading recordkeepers and third party administrators (and a bunch of experts that help them succeed), the discussion was, as always, wide-ranging, including constantly compelling topics like:

Latest Lessons from the Litigation Landscape – fending off fiduciary forfeiture suits

Fiduciary Faux Pas, Pitfalls and Best Practices

Scary stuff from SECURE 2.0 – implications of auto-enrollment for all plans, LTPT employee tracking, etc.

Things I Worry About: Automatic Enrollment (1) https://fredreish.com/things-i-worry-about-automatic-enrollment-1/

Nevin & Fred: Forfeiture Litigation, Meeting Minutes and More https://www.napa-net.org/news/2024/10/nevin--fred-forfeitures-meeting-minutes-and-more/

What Expenses Can Be Paid from Plan Assets?

7 Steps to Reduce Fiduciary Exposure

DOL Successfully Sues Employer for Misuse of Forfeitures

Limiting Fiduciary Liability (Costs)

IRS Proposes Regs to Clarify Timing and Use of Forfeitures

Expert Opinions

The Forfeiture Suits to Date

In a “live” version of the Nevin & Fred podcast at the Strategic Retirement Partners (SRP) annual conference, Nevin & Fred (& Bonnie Treichel & Tom Clark) covered recent litigation trends—and more!

In recent months, the plaintiffs’ bar has “discovered” a new litigation target: the use of forfeitures to offset employer contributions, rather than to offset plan fees or to reallocate them to the remaining participants in the plan. The expanded expert podcast panel reviews the current status, the trend(s), and what plan fiduciaries can/should do about it.

And—on a related topic—what should/shouldn’t be included in committee meeting minutes!

Episode Resources

What Expenses Can Be Paid from Plan Assets? https://www.asppa-net.org/news/2018/10/what-expenses-can-be-paid-plan-assets/ 7 Steps To Reduce Fiduciary Exposure https://www.napa-net.org/news/2019/2/7-steps-reduce-fiduciary-exposure/ New Fiduciary Suits, TDF Demographics and a Prudent Process Primer https://www.napa-net.org/news/2024/4/new-fiduciary-suits-tdf-demographics-and-prudent-process-primer/ Litigation Landscape Some 'Wins,' Some Losses and a New Litigation Target https://www.napa-net.org/news/2023/11/litigation-landscapesome-wins-some-losses-and-new-litigation-target/ DOL Successfully Sues Employer for Misuse of Forfeitures https://www.napa-net.org/news/2024/1/dol-successfully-sues-employer-misuse-forfeitures/ Limiting Fiduciary Liability (Costs) https://www.napa-net.org/news/2021/8/limiting-fiduciary-liability-costs/

IRS Proposes Regs to Clarify Timing and Use of Forfeitures https://www.napa-net.org/news/2023/2/irs-proposes-regs-clarify-timing-and-use-forfeitures/

Expert Opinions https://www.napa-net.org/news/2019/2/expert-opinions/

The forfeiture suits to date. https://www.napa-net.org/header/search/?q=forfeitures

ERISA Advisory Council testimony by:

Bonnie Treichel - https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/about-us/erisa-advisory-council/2024-qdia-treichel-written-statement-07-10.pdf

Tom Clark: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/about-us/erisa-advisory-council/2024-qdia-clark-written-statement-07-10.pdf

The so-called fiduciary rule has been stayed—and legal challenges regarding forfeiture reallocation are picking up. Nevin & Fred discuss what you should be doing…now.

About a month ago two separate federal judges put a hold on the effective date (09/23) of the Labor Department’s new fiduciary rule—indefinitely. n ordering the stay, United States District Judge Jeremy D. Kernodle explained that “the 2024 Fiduciary Rule suffers from many of the same problems” that were found in the version vacated by the Fifth Circuit back in 2018.

On the other (unrelated) hand, the number of suits alleging a fiduciary breach in the use of forfeitures to offset employer contributions is increasing—and most recently those charges have been appended to the more “traditional” excessive fee suits. That, and a couple of the original group have now gotten past the motion to dismiss.

In light of those trends, what should plan fiduciaries do? In this podcast episode, Nevin & Fred will discuss the trends, the issues, the implications, and some next steps.

Episode Resources:

Staff Bulletin: Standards of Conduct for Broker-Dealers and Investment Advisers Account Recommendations for Retail Investors https://www.sec.gov/tm/iabd-staff-bulletin

Fiduciary Rule

Federal Judge Slams Brakes on Fiduciary Rule https://www.napa-net.org/news-info/daily-news/breaking-news-federal-judge-slams-brakes-fiduciary-rule

Another Federal Court Slams Fiduciary Rule https://www.napa-net.org/news-info/daily-news/another-federal-court-slams-fiduciary-rule

Department of Labor Releases Final Investment Advice Fiduciary Rule https://www.napa-net.org/news-info/daily-news/breaking-department-labor-releases-final-investment-advice-fiduciary-rule

Forfeiture Reallocation Litigation

Major Forfeiture Fiduciary Breach Suit Gets Green Light https://www.napa-net.org/news-info/daily-news/major-forfeiture-fiduciary-breach-suit-gets-green-light

Another Excessive Fee Suit (Also) Claims Forfeiture Use a Fiduciary Breach https://www.napa-net.org/news-info/daily-news/another-excessive-fee-suit-also-claims-forfeiture-use-fiduciary-breach

Nordstrom Nailed With Massive Allegations in 401(k) Fiduciary Breach Suit https://www.napa-net.org/news-info/daily-news/nordstrom-nailed-massive-allegations-401k-fiduciary-breach-suit

Future Live Appearances:

Strategic Retirement Partners: https://www.srpretire.com/ ASPPA Annual: https://asppaannual.org/

NAPA 401(k) Summit: https://napasummit.org

With far-reaching implications—likely including the Labor Department’s fiduciary rule—the nation’s highest court has set aside a long-standing judicial deference to federal regulators in interpreting the law. In this episode Nevin (Adams) and Fred (Reish) consider the impact(s).

While the full implications will take time to emerge, it’s almost certainly going to produce more litigation, and in the process, less certainty for advisors, plan sponsors and recordkeepers trying to operate within those boundaries.

Why It Matters

Since 1984, courts have adopted a review framework for challenged regulations. First, to consider whether Congress has directly spoken to the precise question at issue—specifically how the regulation is to be administered/applied—and if so, the court "must give effect to the unambiguously expressed intent of Congress and reverse an agency's interpretation that fails to conform to the statutory text.” And then, if the statute is ambiguous, the court “may not disturb an agency rule unless it is, 'arbitrary or capricious in substance, or manifestly contrary to the statute.’”

Under the new Supreme Court decision, those administrative agency perspectives can, but do not have to, be considered in deciding the case. In sum, courts will no longer be required to defer to the judgement of the regulatory agencies in terms of applying/interpreting ambiguous laws.

The SECURE 2.0 Act of 2022 included dozens of new OPTIONAL plan design choices for plan sponsors. Nevin (Adams) and Fred (Reish) explore the findings of a new survey of which plan design choices plan sponsors are most likely to adopt.

To gain a better understanding of which optional provisions of the SECURE 2.0 Act plan sponsors are most likely to adopt, Fidelity Investments recently invited more than 2,000 clients to participate in a survey, and from that derived the top-five-ranked optional provisions. In this episode, Nevin (Adams) and Fred (Reish) talk about those options—and THEIR favorites.

In this episode we also talk about some of the big defined contribution plan trends captured in Vanguard’s annual How America Saves report—things like the growth of automatic savings features; higher participation and savings rates; expansion of Roth availability; and trends in target-date funds, advice and managed accounts.

If you’re looking to know what’s going on—and what’s coming up—you won’t want to miss this episode of Nevin & Fred!

In this episode, Nevin & Fred discuss new lawsuits regarding fiduciary breaches on the use of plan forfeitures, a managed account default – and the Labor Department’s new fiduciary rule.

In late May a motion to dismiss the suit in one of the half-dozen (and counting) suits challenging the use of plan forfeitures to reduce employer contributions was itself dismissed, with a federal judge deciding that the plaintiffs had made a plausible case to proceed.

Also in late May, participant-plaintiff Debra Hanigan claimed that the plan fiduciaries of the $5.1 billion Bechtel Trust and Thrift Plan “breached their fiduciary duty of prudence to Plaintiff and other Plan participants, causing tens of millions of dollars of harm to Plaintiff and Class Member’s retirement accounts” – by defaulting participant investments into a managed account option that she claimed was nothing more than an expensive target-date fund.

And then in late April, the Labor Department’s new Retirement Security Rule (generally referred to as the fiduciary rule) got its first challenge in Federal Court. Claiming that the rule was “contrary to law and arbitrary and capricious,” the suit seeks “preliminary and permanent injunctive relief to prevent the DOL from attempting to enforce these unlawful rules and regulations.”

Whew!

In late April the Department of Labor (DOL) released the Retirement Security Rule, generally referred to as the “fiduciary rule.” Nevin (Adams) and Fred (Reish) take a look at what’s changed —what hasn’t—and what it all means for retirement plan advisors.

This now-final rule updates and broadens the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). In this new podcast episode, the prolific podcasting pair ponder:

The impact(s) to retirement plan advisors who are already ERISA fiduciaries, and compliant with PTE 2020-02,

How the five-part test has changed,

The implications of the so-called “Hire Me” exception,

What changes to the “regular basis” criteria mean to the “drive-by” plan sale to plan sponsors.

On April 7, 2024, Nevin (Adams) & Fred (Reish) took their popular podcasting platform on the road to Nashville, Tennessee, for a live version at the NAPA 401(k) Summit—in the middle of a solar eclipse!

In the second part of an expanded session, the prolific podcasting pair pointed to some takeaways from recent litigation trends including:

The importance of fiduciary training New Fiduciary Suits, TDF Demographics and a Prudent Process Primer | National Association of Plan Advisors (napa-net.org)

The meaning of “meaningful benchmarks” Lack of ‘Meaningful Benchmark’ Bounces (Another) 401(k) Excessive Fee Suit | National Association of Plan Advisors (napa-net.org)

Not to mention some predilections and predictions about the pending popularity and proclivities of pooled employer plans (PEPs). PEPs Will Match Single Employer Plan Adoption in 5 to 10 Years: Fred | National Association of Plan Advisors (napa-net.org)