This issue’s topics include:
DOL liberalizes views on economically targeted investments
The U.S. Department of Labor (DOL) has reversed guidance it issued in 2008 with respect to retirement plans’ allocating funds to economically targeted investments (ETIs) that consider environmental, social and governance factors. This article discusses the DOL’s about-face on this topic. A sidebar discusses whether plan fiduciaries are required to do anything new with respect to ETIs.
Make the change
IRS expands midyear safe harbor plan changes
Sponsors of safe harbor 401(k) plans now have more flexibility to make “midyear” changes to their plans, thanks to a policy change announced by the IRS. This article reviews the changes, outlined in IRS Notice 2016-16, which took effect January 29. ERISA 1.401(k)-3(k)(3) or 1.401(m)-3(a)(2)
Court dismisses excessive fee charge
When parties are considered fiduciaries
A U.S. Court of Appeals has denied a 401(k) plan sponsor’s effort to recover funds from its administrator based on an accusation that it had charged participants “excessive” fees. This article explains why the court rejected the plaintiff’s arguments and reminds plan sponsors to carefully scrutinize fee structures during contract negotiations.
Hecker v. Deere & Co., 556 F.3d 575, 583 (7th Cir. 2009)
Renfro v. Unisys Corp., 671 F.3d 314, 324 (3d Cir. 2011)
McCaffree Financial Corp. v. Principal Life Insurance Company (8th Cir., No. 15-1007)
Studies support pairing auto-escalation with auto-enrollment
Auto-enrolling 401(k) plan participants without also incorporating an auto-escalation feature might be a counterproductive exercise. Survey data suggests that average 401(k) plan deferral rates have been trending downward even though more employers are adopting auto-enrollment. The apparent culprit: low auto-deferral rates. This brief article highlights how to use both auto-enrollment and auto-escalation clauses to help benefit employees.
This feature lists a few key tax reporting deadlines for June, July and August.
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