Voya sued over own investments in their plan

When you are in the mutual fund business and you offer those funds in your plan, you probably will get sued. So Voya is the next defendant.

The case is alleging that Voya is self-dealing. The complaint alleges the Voya funds in the plan, were not selected and retained for the plan as the result of an impartial or otherwise prudent process, but were instead selected and retained by the defendants because they benefited financially from including these options in the plan.

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Pennsylvania to add IRA program

Add another state-run IRA program for private-sector workers, that will increase retirement plan coverage.

Pennsylvania’s Keystone Saves program will be phased in over four years; the first two years are set aside for the state to set up the program.

Employers with fewer than five employees, and those who have been in business for less than 15 months, are excluded from Keystone Saves, as are employers with already established retirement savings plans.

The state claims that more than two million working Pennsylvanians currently do not have access to retirement savings at their workplace.

As with another state-run program, this could be another opportunity to sell pooled employer plans.

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Make sure the plan custodian know who your plan trustees are

If you’re a closely held business or not, changes do happen. Whether it’s leadership or who serves as your plan’s trustee, change will likely happen. The problem sometimes is when the plan document has been updated to reflect who the current trustees are, yet the plan custodian doesn’t. That could certainly be a problem if one of the trustees left on acrimonious terms and wants to go to business for themselves and take a distribution that they weren’t entitled to.

So if you make a change of trustees, also make sure that your third-party administrator and plan custodian know as well, so the records and signings cards are updated. Otherwise, an unhappy trustee may think it’s a 401(k) version of Supermarket Sweep.

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Correct the late deferral issue correctly

Correcting your plan’s late deposit of salary deferrals by depositing them and making a contribution to make up for lost earnings in your 401(k) plan isn’t enough.

Why? Well, Form 5500 requires you to truthfully answer whether you have late deferrals. If you answer yes (well you have to under penalties of perjury), it will alert the Department of Labor (DOL) as to your issue. The DOL will check their files and see if you filed a Voluntary Fiduciary Compliance Program, application with them. If you didn’t, they will contact you and give the suggestion you should, which would also include Form 5330.

Many plan sponsors don’t do that because of the cost and wait to hear from the DOL. Speaking from experience, I’d rather nip problems in the bud and complete the issue ahead of time.

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Associations, MEPs, and PEPs

I have worked with several associations in setting up a multiple employer plan (MEP) and even more associations that didn’t want to start one.

As I often discuss, starting a MEP isn’t easy because of the times it takes to grow assets and become viable. For associations, a MEP could be another way of showing value for association memberships, but the association may be wary of the work that is involved. There will always be liability issues of being a fiduciary of any kind and the question of whether it really will be of value to them, especially in terms of membership interest and revenue.

Perhaps Pooled Employer Plans (PEPs) can be a conversation starter because the structure could eliminate the fiduciary role of an organization with the pooled plan provider. I think associations could be a great avenue for associations that were afraid of MEPs.

There is no slam dunk and every association is different because the dynamics with every organization are different. However, if you have contacts with the powers that be at these associations, I think this could be a tremendous thing.

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Kroger is the latest 401(k) lawsuit target

Kroger is the latest target in a class-action lawsuit. The supermarket chain has been accused of various fiduciary breaches under ERISA, having their 401(k) retirement plan pay unreasonably high fees for recordkeeping services and failing to disclose to plan participants fees associated with the plan.

According to the lawsuit, the Kroger 401(k) plan currently has nearly $6 billion in assets and the supermarket did not sufficiently attempt to reduce the plan’s expenses. The lawsuit claims that a similar plan would pay $10 a participant while the Kroger plan charged $20 a participant in expenses.

The lawsuit further alleges that the defendants failed to properly disclose the fees charged to participants in the plan in their 404a-5 participant fee disclosure documents.

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401(k) contributions are up for 2022

In another consolidation for the retirement plan business, Ascensus, a recordkeeping services provider and third-party administrator announced it has reached an agreement to merge with Newport Group.

Newport is a retirement services provider with close to 1,500 professionals, more than $150 billion in retirement assets under administration, and more than $300 billion in corporate retirement and insurance assets, according to Ascensus.

The combined entity will have $700 billion in assets under administration, including more than 150,000 retirement plans and 15 million participants in tax-advantaged savings plans, Ascensus says.

David Musto, Ascensus’ president and chief executive officer, will serve as CEO of the combined company. Greg Tschider has stepped down as CEO of Newport, with Laura Ramanis, previously Newport’s chief operating officer, taking over as interim CEO.

The financial terms of the deal haven’t been disclosed, which is projected to close in the first quarter of 2022.

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Ascensus gobbles up Newport

In another consolidation for the retirement plan business, Ascensus, a recordkeeping services provider and third-party administrator announced it has reached an agreement to merge with Newport Group.

Newport is a retirement services provider with close to 1,500 professionals, more than $150 billion in retirement assets under administration, and more than $300 billion in corporate retirement and insurance assets, according to Ascensus. 

The combined entity will have $700 billion in assets under administration, including more than 150,000 retirement plans and 15 million participants in tax-advantaged savings plans, Ascensus says.

David Musto, Ascensus’ president and chief executive officer, will serve as CEO of the combined company. Greg Tschider has stepped down as CEO of Newport, with Laura Ramanis, previously Newport’s chief operating officer, taking over as interim CEO.

The financial terms of the deal haven’t been disclosed, which is projected to close in the first quarter of 2022.

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For The 401(k) Plan Sponsor, “Secrets” Of The Retirement Plan Business Exposed

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

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Give them the tools to succeed

I had two friends running for political office this November and they were great guys. The problem was that their local political party didn’t give them the resources to succeed. When you have no campaign signs, ads, or literature, you don’t have the tools to succeed. You will fail without those tools.

Whoever you hire for a certain position, make sure they have the tools to succeed. Otherwise, don’t be surprised they fail. I always talk about my time at a certain Long Island law firm and how I failed to generate enough business because I didn’t have the tools to succeed. Upon leaving that firm, I gave myself the tools to succeed, and I’ve been doing OK. Freedom from a bureaucracy that shackled me was the reason I was able to succeed. I’ve seen too many salespeople and plan administrators fail at their jobs because they didn’t have bosses that supported what they needed.

Don’t guarantee failure, support your staff.

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