The Rosenbaum Law Firm P.C. Blog

May fortune favor the bold. I have to say something nice because I wouldn’t attempt a Bitcoin offering with the Department of Labor (DOL) against it.

Bitwage announced a partnership with ForUsAll to offer a one-stop shop for cryptocurrency 401(k) plans combined with cryptocurrency payroll.

Bitwage is a provider of Bitcoin and cryptocurrency payroll, invoicing, and benefits solutions. Through Bitwage’s integration with ForUsAll, they will offer a 401(k) plan with ForUsAll’s self-directed crypto window.

Participants will be able to transfer up to 5% of their portfolio into a cryptocurrency window where they can invest in a range of cryptocurrencies. ForUsAll has sued the DOL over the crypto 401(k). guidance.

Standard Insurance Company and Securian Financial Group, Inc. announced that The Standard will acquire Securian Financial’s retirement recordkeeping business, with a closing set for this year.

The transaction, excludes Securian pension risk transfer and institutional retirement businesses.

My latest article for JDSupra.com can be found here.

My latest newsletter can be found here.

If your plan is with a very large plan provider, you may be contacted by a competing provider that the incumbent has been sued. What do I think? Not much. If you’re big enough as a company, you will likely have been sued in one way or another. Civil litigation is way different from criminal litigation, there is a different level of proof for a trier of fact. A provider could have done nothing wrong, but still sued. It could be, just because they’re deep pockets. I was once sued as a fiduciary for a multiple-employer plan because I replaced a fiduciary that stole from another plan. Why did I get sued? I had fiduciary liability insurance.

Unless the plan provider is being sued for embezzlement fo fraud, I wouldn’t worry anything about it. So many of the current cases dealing with plans are just dependent on ERISA litigators, that merely want an easy settlement/score. Be concerned with the level of service that you get instead, as well as whether the fees are reasonable or not.

The Department of Labor (DOL) has finished its ESG rule for retirement plans and sent it to the White House for final approval.

The final version of that rule will not be published until November.

The proposed rule was published in October 2021. It walked back provisions of two Trump-era rules that discouraged the use of ESG criteria in 401(k) Plans and other employer-sponsored retirement plans. The proposed rule stated that ESG factors can be considered financially material in investment selection and that sustainable funds can be used as the default investments on plan menus. By allowing retirement plans to include ESG-themed investments as a default, the DOL would allow target-date funds and other asset-allocation products to widely incorporate ESG factors and not run afoul of regulations.

The proposed rule also sought to clarify that climate change can be a material factor for pension funds to consider when voting on shareholder resolutions.

The problem for me is that I’m from a school where investment selection is based on total return and with a political football this has become, the rule is subject to who is sitting in the White House, and that may change in 2024.

The Internal Revenue Service (IRS) has issued Notice 2022-53, providing guidance related to certain provisions of section 401(a)(9) that apply for 2021 and 2022.

The guidance for certain RMDs for 2021 and 2022 states that a DC plan that failed to make a specified RMD will not be treated as having failed to satisfy Internal Revenue Code section 401(a)(9) because it didn’t make that distribution. In addition, participants who didn’t take a specified RMD, the IRS will not asses an excise tax under IRC section 4974. If a participant has already paid an excise tax for a missed RMD in 2021, the participant may request a refund of that excise tax.

Fidelity Investments, Vanguard, and Alight Solutions have teamed up with Retirement Clearinghouse, LLC (RCH) to create a consortium of workplace retirement plan recordkeepers, Portability Services Network, LLC, to accelerate the nationwide adoption of auto portability.

The idea is that plan participants would have their account balances automatically move to their new retirement plans. The hope is that automating the process of moving 401(k), 401(a), 403(b), and 457 account balances from plan to plan when workers change jobs will help limit cash-outs and preserve trillions of dollars in savings in the U.S. retirement system. More importantly for the providers, it will help them keep more assets.

When markets go south, participants fly for safety. I’m a fan of dollar cost averaging, but that’s just me and my situation as a 50-year-old with 20 years left to maybe retire.

Alight Solutions has published September updates from its 401(k) Index, showing that with stocks having their worst month since March 2020, plan participants have shifted to safer investments.

Aside from two trading days in the month, it showed that net trading activity moved money from equities to fixed income. Stable value funds accounted for 80% of net inflows and money market funds received another 15%. Half of the net outflows were from target-date funds.

Mutual of America 401(k) plan participants have brought a class action lawsuit against Mutual of America Life Insurance Company for alleged breach of fiduciary duty.

Plan participants claim that Mutual of America 401(k) plan fiduciaries breached its fiduciary duties of loyalty and prudence to participants by selecting a proprietary, closed architecture recordkeeping platform and for failing to review the plan’s administrative expenses.

Plan participants have alleged that Mutual of America failed to use a prudent and loyal process for selecting, monitoring, and removing Mutual of America funds from the investment lineup that was more expensive and underperformed their benchmarks.

It was also alleged that the Mutual of America plan included 29 proprietary investments, at the end of 2020—comprised of one proprietary fixed-interest account and 28 proprietary mutual funds—in a menu that consisted of 50 total investments. I will say 50 is a lot of investments in a plan, too many.

The plan has between 1,800 and 2,000 participants and approximately $274 million to $436 million in assets, according to court documents.

As I always say, these cases are like shooting a fish in a barrel. Mutual fund companies will also have their own funds in their 401(k) plan to keep up appearances.