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SECURE Act 2.0 – Both Houses of Congress are Considering Retirement Reforms That Appear to Have Enough Bipartisan Support to Become Law Before the End of this Year

Bills in both the House and the Senate aim to build on the SECURE Act passed in 2019. This legislation is called Securing a Strong Retirement Act and is nicknamed SECURE Act 2.0. There is enough bipartisan support for some of these measures to become law before the end of this year. A number of these reforms are in the Democrats $3.5 trillion stimulation package. Progressive Democrats are hoping to use the reconciliation process to push through some of…

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The Day is Fast Approaching When Congress Will Be Forced to Take Action to Shore Up Social Security

The Board of Trustees for Social Security recently issued its annual report. This report states the trust fund for Social Security Old Age, Survivors and Disability Insurance (OASDI) will be depleted by 2033. This is a year earlier than projected last year. The primary challenge for Social Security is an aging population due to low birth rates. The number of Social Security retirees is growing faster than the number of covered workers. As a result, since 2008, the cost…

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Do Class Action Lawsuits Against Plan Sponsors Accomplish Anything Beyond Generating Fees for Plaintiffs’ Attorneys?

Historically, there has been little litigation involving retirement plans. But in recent years such litigation has exploded. This began with what are known as “stock drop cases” filed following the market crash of 2008 and 2009. These cases were class actions bought against large corporate plans where publicly traded company stock was included as an investment option. The plaintiffs alleged that company stock was an imprudent investment due to a steep drop in value. Many of these cases settled…

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New Department of Labor Regulations Will Greenlight the Use of ESG Funds in Retirement Plans

In August, the Department of Labor submitted new proposed ESG rules to the White House’s Office of Management and Budget – the last step before publishing regulations. The proposed rules should be published before the end of this year. There is no doubt these rules will be favorable to ESG investing. ESG investing, which considers environmental, social and corporate governance criteria, in addition to traditional financial criteria, has greatly increased in popularity in recent years. Money invested in ESG…

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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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