RetireAware Blog -

Allen Steinberg

19.01.2021 03.46 GMT+0000

Recent guidance from the DOL illustrates the outgoing administration’s desire to leave its mark.

Outgoing Administration Offers a Few Parting Shots

Recent guidance from the DOL illustrates the outgoing administration’s desire to leave its mark.

Conflict ESG fiduciary

Over the past few months the Department of Labor has issued three pieces of guidance that are (potentially) significant for plan sponsors and plan fiduciaries. These include final regulations describing new restrictions on the use of environmental, social and governance factors (“ESG”) in the selection of plan investments, an interpretative bulletin) containing new rules for plan fiduciaries with respect to proxy voting, and a class-wide prohibited transaction exemption permitting fiduciaries to receive (otherwise prohibited) forms of compensation--such as commissions. These three pieces of guidance may prove to be significant--if they are ever allowed to go into effect.

Allen Steinberg

16.07.2020 01.51 GMT+0000

New DOL guidance would provide advisors with incentives to sell commissionable products.

DOL Completes Trifecta of Questionable Policies

The DOL’s new guidance reinstates prior definition of investment fiduciary and offers new exemption for (otherwise prohibited) forms of compensation for plan fiduciaries.

Commissions fiduciary

The Department of Labor has issued new guidance defining when an investment adviser is a plan fiduciary--and the standards that must be followed by investment fiduciaries. The guidance reinstates a 1975 test defining investment fiduciaries and proposes a new prohibited transaction exemption allowing fiduciaries to collect commissions and third-party payments.

Allen Steinberg

02.07.2020 09.56 GMT+0000

The U.S. Department of Labor has issued new proposed regulations that provide guidance on the process that plan fiduciaries should use in selecting ESG investments. In issuing the proposed regulations the DOL targets ESG funds and creates new requirements--and hurdles-to the use of such funds.

DOL Delivers Lump of Coal to ESG Funds

Proposed DOL regulations would add new restrictions to the use of ESG funds.

ESG fiduciary investments

The Department of Labor has issued new proposed regulation regarding intended to guide plan fiduciaries seeking to invest in funds that utilize environmental, social and governance (“ESG”) considerations. The proposed regulations identify specific (additional) steps that fiduciaries must take in order to utilize ESG funds and would prohibit use of ESG funds within plan “default” investments.

Allen Steinberg

28.05.2020 07.40 GMT+0000

On May 15 the Department of Labor finalized new “safe harbor” rules for the use of electronic media to provide documents required under ERISA. These new rules represent a potentially important easing of the efforts needed for plan administrators to meet disclosure obligations under ERISA.

New Safe Harbor for Electronic Communication

New options for the use of on-line disclosure.

disclosure Electronic

The Department of Labor has issued new “safe harbor” rules for the use of electronic media to provide documents required under ERISA. These new rules represent a potentially important easing of the efforts needed for plan administrators to meet disclosure obligations under ERISA. However, a more careful review of the rules raises significant questions about whether the new rules will live up to their potential.

Allen Steinberg

21.04.2020 10.06 GMT+0000

403(b) plan sponsors have reasons to move away from the traditional on-site representatives. Changes in how we work as the result of the COVID-19 pandemic may provide these sponsors the opportunity to make a change.

Getting Beyond COVID-19: Employee Communication & Education Service Model

Insurance companies play an outsized role in delivering 403(b) plans. COVID-19 may change that.

COVID-19 Recordkeeper Representatives

Insurance companies (and annuities) play a far greater role in delivering 403(b) plans than in the 401(k) market---and the sale of annuities through these plans is far more lucrative than recordkeeping a plan dominated by mutual funds. In order to successfully sell these annuities, insurers rely on on-site representatives. However, these representatives may not act in participants’ best interests. Changes in how we work as the result of the COVID-19 pandemic --with an increased reliance on on-line resources--may provide plan sponsors the opportunity to revisit the current delivery model.

Allen Steinberg

25.02.2020 02.26 GMT+0000

Fiduciary litigation targets another large plan--but in some new ways.

Suit Against Shell Plan Drills for New Legal Claims

Perhaps the most significant claim raised against Shell pertains to the claim that the Shell fiduciaries allowed Fidelity to use participant data to promote non-plan products and services.

Data fiduciary Managed

A new lawsuit filed against the Shell Oil Company’s 401(k) plan raises several new challenges to fiduciary’s behavior. Most significantly, the suit assets that participant data is a plan asset and the use of such data by the plan recordkeeper to promote non-plan products generates several new fiduciary challenges.

Allen Steinberg

25.01.2020 05.01 GMT+0000

In selecting new providers and reducing plan costs, fiduciaries need to be alert to the conduct of deselected providers.

Winning While Losing

Terminated Providers May Represent a Special Fiduciary Challenge.

Broker fiduciary Provider

Scrutiny of plan fees may create situations where an incumbent plan provider can make more by losing a highly competitive bid for an employer-sponsored plan -- and then actively “harvesting” accounts and assets from that plan--than by retaining that plan. And, once deselected, the provider-- and individual representatives employed by that provider--may have a strong economic incentive to encourage participants to move assets out of the employer-sponsored retirement plan and into the retail products of the (deselected) provider.

Allen Steinberg

02.01.2020 01.44 GMT+0000

The SECURE Act, signed by President Trump, contains a potpourri of provisions encouraging plan formation, use of annuities and adoption of safe harbor designs.

SECURE Act Passed–Ensuring Much Activity and Some Change

New Legislation Creates Planning Opportunities and Pitfalls.

annuity legislation MEPs SECURE

The SECURE Act offers employers some new options and alternatives--and a handful of new mandates. Overall, the Act seeks to encourage employers to adopt retirement plans and to encourage employees to use those plans. Although the Act will not rock the retirement plan world, over the course of time it may shake things up just a bit.

Allen Steinberg

13.12.2019 06.59 GMT+0000

Fee compression affecting retirement plan providers has been well documented. However, it is harder to track efforts by these providers to shift revenue out away from the watchful gaze of plan fiduciaries.

Actions and Reactions

Retirement plan providers are under pressure to reduce fees--and are likely to respond by shifting more focus to non-plan products.

Fee compression fiduciaries

Under Newton’s Third Law, for every action, there is an equal and opposite reaction. Fee compression for retirement plan providers, such as plan recordkeepers and investment providers, is well documented. However, it is harder to document provider efforts to replace compressed revenue from sources just beyond the scrutiny of (most) plan fiduciaries--through the sale of non-plan products to individuals participating in employer-sponsored plans.

Allen Steinberg

29.10.2019 01.55 GMT+0000

Employers need to develop strategies for dealing with state/federal tug-of-war over regulatory authority.

The (Individual) States of America vs The United States of America

The states and the federal government are engaged in a tug-of-war over the ability to issue rules affecting key HR and benefits matters. This is a game with no winners.

Federal Preemption States

There is an ongoing conflict between the federal government and individual states over benefits and HR policies--with states seeking to fill gaps left by the federal government and the federal government claiming that the state initiatives are preempted.