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Self-Directed Brokerage Accounts – To Add to Your Plan or Not: That is the Question

Participants may be attracted to self-directed brokerage accounts (SDBAs) because of the seemingly infinite choice of investment options. While it’s tempting to please these often-vocal employees, much consideration should be given when contemplating an SDBA option for your qualified retirement plan. There are several fiduciary issues your committee should discuss, decide, and document. Outside Advisors The impetus for the interest may be that participants want to take advantage of the advice from an outside advisor with the intention of…

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Regret Aversion: Fighting the FOMO of the Financial World

Regret aversion is a construct in behavioral finance theory that suggests investing decisions are, at least in part, driven by fear of later regretting a “wrong” choice. And this isn’t just some psychological mumbo jumbo. Functional MRI neuroimaging studies of the brain have demonstrated a biological correlate to this phenomenon in the form of increased activity within the medial orbitofrontal cortex and amygdala. The fear is real — and it can have serious consequences for participants. How Does Regret…

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DOL Cybersecurity Tips

In this age of relying heavily on technology, it is vital to take the necessary cyber security precautions. You want to make sure that all sensitive information is highly protected. This document showcases some tips and tricks for plan sponsors. Topics include: Security Standards, Establishing a Formal Cybersecurity Program, Using Multi-Factor Authentication, Cybersecurity Insurance, and much more.     Per the DOL, plan sponsors should ask the service provider about the following: Security Standards Security Practices Security Policies Audit…

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Recent PSCA Survey Reveals that Most Plan Sponsors Have a Retirement Plan Committee

A recent Survey conducted by the Plan Sponsor Council of America (PSCA) found that the majority of plan sponsors have a formal committee in place that is responsible for plan administration and investments. This survey reveals that there is a fair amount of commonality in approaches with larger plans, not surprisingly, tending to have more formality to their process. There were 255 responses to this survey.  Many were larger plans – almost 50% of respondents have a plan with…

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Department of Labor Issues Guidance in the form of “Tips” and “Best Practices” for Cybersecurity / Plan Sponsors Should be prepared to Establish on Audit They Have Done their Due Diligence Regarding Cybersecurity

                      In April, the Department of Labor issued its first guidance on cybersecurity for plan sponsors, service providers and participants. It did so at the behest of the Government Office of Accountability (the “GAO”). That agency has been pushing the Department to identify minimum standards for mitigating cyber security risks in benefit plans. Although cyber threats are a relatively new phenomenon, these threats simply throw a new wrinkle into…

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Ongoing Litigation Against Colleges and Universities – Supreme Court agrees to review dismissal of lawsuit against Northwestern University Hughes v. Northwestern University

The Supreme Court has granted a Writ of Certiorari and agreed to review the dismissal of the plaintiffs’ suit filed against Northwestern University. The decision will likely focus on the duty of fiduciaries to monitor plan investments on an ongoing basis. Since 2016, more than 20 lawsuits have been filed against fiduciaries of university retirement plans. The defendants are some of the largest and most prestigious schools in the country. These schools present tempting targets as their retirement plans…

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American Rescue Plan Act (ARPA) – Some Highlights for Pension Plans and 401(k)

Under the American Rescue Plan Act of 2021, Tax Payers will Pick up the Tab for Underfunded Multiemployer Pension Plans for the Next 30 Years The American Rescue Plan Act of 2021 (“ARPA”) is the $1.9 trillion stimulus package signed into law by President Biden on March 11th.  The key provisions are a $300 per week supplement to unemployment benefits, paid emergency leave for 100 million individuals and $1,400 in direct payments to many Americans. Among many other provisions,…

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As Expected, the Biden Administration Plans to Walk Back the New Regulation Restricting the Use of ESG Funds in 401(k) Plans

ESG investing looks at environmental, socially responsible and corporate governance criteria in evaluating investments. The belief is that, over the long term, these factors can positively impact financial performance. The popularity of ESG investing has increased in recent years. Many defined contribution plans now include an ESG option in their lineup. Net flows into these funds reached $51 billion 2020, which represents a tenfold increase over 2018. The Department of Labor’s new rule for ESG investments took effect January…

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Federal District Court Rules Record Keepers May Use Participant Data to Cross-Sell Retail Products

Harman et al vs. Shell Oil Company et al   This class action suit, filed in January of 2020, was brought on behalf of participants in the Shell Provident Fund 401(k) Plan. The case was filed in the Federal District Court for the Southern District of Texas. The allegations are typical of such suits and include contentions such as the plan fiduciaries allowed the Plan to bear unreasonable administrative costs and failed to adequately monitor the investment lineup.  …

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5 Tactics to Increase Retirement Plan Participation

Employees fail to enroll in their retirement plan for a variety of reasons. They may be intimidated if it’s their first time around or they might not fully understand and appreciate the benefits (or the downside of not participating). Some could be concerned about “locking up” their money — and others might worry so much about making the “wrong” investment decision that they procrastinate making any decision at all.  As a plan sponsor, you know the advantages of offering…

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