Nevin & Fred

On March 30, the Employee Benefit Security Administration(EBSA) published its much-anticipated response to President Trump’s Executive Order on Alternative Investments. What, if anything, does it mean?

In this episode Nevin (Adams) and Fred (Reish) look at theproposal—what it says (and doesn’t), the six factors to be considered—and one that isn’t—the process ahead, and its implications for plan fiduciaries.

On March 12, Judge Jeremy D. Kernodle in the US DistrictCourt for the Eastern District of Texas approved a motion to vacate the Retirement Security Rule. What does that mean for retirement security?

The motion to vacate – essentially waving a judicial wand tomake it as though the regulation never existed – was unopposed by the Department of Labor.

But what does that mean for retirement plan advisors – andretirement plan advice?  Is the 5-part rule still in force?  Whatabout PTE 2020-02?  And what about rollovers?

Nevin (Adams) and Fred (Reish) discuss and debate the “new”fiduciary landscape.

Episode Resources

On February 3, Nevin (Adams) and Fred (Reish) met with avery special group of third-party administrators at an event sponsored by Definiti.

‘Tis the season for “best of,” “most,” and of course, “naughty and nice” list making.  In this episode Nevin (Adams) and Fred (Reish) share theirs with regard to retirement plans.

In that holiday classic “Santa Claus is Coming to Town,”Santa is said to be “making a list and checking it twice…” all with the purpose of finding out “who’s naughty and nice.” Well, in this special holiday-inspired episode, Nevin and Fred share their lists.  So, who/what is going to wind up with a lump of coal in their stocking?

Here are our lists:

Naughty 

1. Surveys that promote bogus data to generate business for themselves.  Scare techniques generally, including by those who use surveys and studies to do that.

2. Frivolous lawsuits - given multiple chances to make their claim(s) - the forfeiture suits primarily (note:  some of that comes from apparent conflicts in the laws and regulations…for example, the IRS says that using forfeitures to offset contributions is possible, but the DOL says that, if left to discretion, it is a fiduciary duty that must be in the best interest of participants.

3. Social Security looming shortfalls left unaddressed - and everyone says it won't be a problem.  

4. The lack of any integrated fiduciary/institutional answer to retirement income. Although the steps taken, e.g., the SECURE Act, are “nice.”

5. The complexity of the laws governing qualified plans, especially when it comes to small employers.

Nice

1. Signs that people are saving more and better. Evidence in PSCA, Vanguard and Fidelity surveys.  The very low costs of saving through 401(k) plans as compared to retail (andpartially the plaintiffs’ attorneys who have contributed to that).

2. DOL backing plan fiduciaries on the forfeiture reallocation suit.  

3. More personalized target-date funds/managed accounts.

4. Pooled Employer plans (though keep an eye on themarketing and administration of these programs down the road).

5. Mandatory automatic enrollment for new 401(k) and 403(b) plans.

6. Retirement issues continue to be a bipartisan issue mostly). 

Episode Resources:

Misleading headlines/surveys

As Halloween approaches, and thoughts turn to ghosts,goblins and things that go bump in the night, Nevin (Adams) & Fred (Reish) turned their focus to things that SHOULD have the attention of (and perhaps even scare) plan fiduciaries.

Now, there are lots of things that require careful attention, selection and monitoring of plan assets and services by planfiduciaries; advisors and plan sponsors alike. But there are some things that may sneak up on even the most attentivefiduciary – things like:

Your target-date fund glidepath(s) – Is it “to”retirement or “through” retirement, is it appropriate for your participant base, and do THEY know what it is (particularly at the projected date of retirement)?

The degree of personalization in a “managed” account– How personalized is it, what data elements are considered, is the cost (relative to a target-date fund alternative) reasonable for the value provided, and who pays it?  Is it structured as a qualified default investment alternative (QDIA)?

Cybersecurity – What provision(s) have your providersmade in securing participant data (particularly in view of the sample questions provided by the Labor Department), and are you prepared to deal with those questions in a DOL audit?   

Participants that leave their accounts “behind” – Whatprocedures do you have in place to communicate with, and in some cases track down for distributing benefits?  Are youable to appropriately track and administer required minimum distributions (RMD)?

Ignorance of fees – Do you know what fees are being paid by the plan, to whom, for what, and how?

Personal liability – Plan fiduciaries are personally liable for the actions they take (or don’t) with regard to plan administration.  Traditional organizational insurance policies don’t cover that, nor does the fiduciary bond required. What provision(s) have you made to insure against that possibility?

Episode Resources

On September 15, the IRS/Treasury announced the much-anticipated final regulations on SECURE 2.0’s new limits on catch-up contributions.  In this episode Nevin & Fred talk about what lies ahead.

These final regulations apply to retirement plans thatpermit participants who have attained age 50 to make additional elective deferrals that are catch-up contributions—which will now be restricted to Roth for individuals making $145,000 or more (adjusted for inflation), effective in January.

A recent Plan Sponsor Council of America survey found thatfewer than 5% of plan sponsors said they were “ready to go” with these changes, while more than 4 in 10 were “struggling with payroll logistics.”  On the other hand, nearly as many (40.2%) said they expected to be ready by January 1.

Things to note:

1.  This IS going to happen (some had thought/hoped there would be an extension).

2.  If your plan doesn’t allow Roth, you can't do Roth catch-ups(or catch-ups for those earning more than $145k in FICA wages). 

3.  You don't have to allow Roth.  But with this change, you might want to reconsider. 

4.  You’ll get more time/flexibility to correct mistakes (andthere will surely be mistakes). 

In this episode we’ll also discuss the issues surrounding personalization and personal data: lawsuits challenging utilization for purposes NOT related to the plan—and massive SEC fines for allegedly inadequate disclosures.

Episode Resources:

 Catch-Up “Muster”

On August 7, President Trump issued a much-anticipatedexecutive order, directing the Labor Department to (re)consider barriers to defined contribution plans accessing alternative investments.  Nevin & Fred check it out – and theimplications.

In recent days, federal courts have dismissed two notablesuits regarding forfeiture reallocation, but most notably the Labor Department has now weighed in on behalf of plan fiduciaries in another case.  Could this be a turning point?  Nevin & Fred weigh in.

The suits – against JP Morgan and Wells Fargo – weredismissed in different courts on different grounds.  Still, they came at a time, and in a way, that suggests at least some federal courts are now inclined to see practices long sanctioned by practice (and the IRS) as meritless.

The real game changer, of course, might be the LaborDepartment’s “friend of the court” filing on yet another suit – one that the fiduciary defendants have already had success in challenging the suit, and yet find themselves (still) in court litigating the issue(s).

Speaking of the Labor Department, a federal judge in Texasrecently ruled on a suit filed challenging the application of the so-called fiduciary regulation, most specifically with regard to its implications on rollovers.

So what does all that portend for ERISA plan fiduciaries?  And what might the anticipated executive order from the Trump Administration expanding/opening the door for private assets in defined contribution mean?

All this and more in the latest episode of Nevin (Adams)& Fred (Reish)…

Episode Resources

Forfeitures

Some call them “lies”—but in this episode, Nevin (Adams) andFred (Reish) highlight some of the most common—and confusing topics—about retirement plan responsibilities.

Nevin (Adams) & Fred (Reish) brought their prolific,pugnacious, and provocative perspectives in a live podcast format to the record-breaking NAPA 401(k) Summit.

In part 1 the precocious podcasting pair talked about anumber of lessons to be learned from recent litigation, including:     - Who bears the burden of proof in ERISA litigation—according to the United States Supreme Court (bad policy, but “good” law)?- A rare jury trial—and a BIG settlement.  Why they’re rare (but may become more common).  Oh, and it involved a multiple employer plan (MEP).   - Fred clarifies his prediction on PEPs (but he’s still a fan).

In part 2, the pugnacious pair presciently pontificated on:      - What to make/do about the recent surge in litigation regarding plan forfeitures;    - What to consider in light of recent developmentsregarding private investments in defined contribution plans;    - The implications of/for proxy voting by definedcontribution plans in the aftermath of recent litigation regarding American Airlines.

Episode Resources

Forfeitures

Nevin (Adams) & Fred (Reish) brought their prolific,pugnacious, and provocative perspectives in a live podcast format to the record-breaking NAPA 401(k) Summit.

That’s right, at the mid-point of the 2025 NAPA 401(k)Summit, the precocious podcasting pair talked about a number of lessons to be learned from recent litigation, including:

• Who bears the burden of proof in ERISA litigation—according to the United States Supreme Court (bad policy, but "good" law)?
• A rare jury trial—and a BIG settlement.  Why they’re rare (but may become more common).  Oh, and it involved a multiple employer plan (MEP).

• Fred clarifies his prediction on PEPs (but he's still a fan).

And that’s just Part 1! 

Episode Resources 

Burden of Proof Ruling

As interest rates rise, so has interest in pension risktransfer (PRT)—and litigation.  Nevin & Fred take a look at what’s underlying (and undermining) that focus, aswell as a new suit alleging aggressive participant marketing.

Pension risk transfer is an aptly named process undertakenby an organization that wants to transfer its pension obligations to another entity, typically an insurance company. The process itself is a fiduciary decision requiring carefulconsideration of the entity to which those obligations are transferred—and therein lies the basis of a recent spate of litigation regarding those choices (and during a period of time in which PRT volumes have been setting records). 

A “new” entrant to the forfeiture reallocation suit “suite”—and a decision in favor of fiduciary defendants.  Nevin & Fred review the latest developments.

Yet another 401(k) forfeiture fiduciary breach suit has beenfiled—but there are some key differences:

• The plaintiffs are represented by the law firm of Schlichter Bogard, LLC.
• The plan involved was the largest targeted by this type of litigation to date (nearly $8 billion).
• The plan document language prohibited use of forfeitures to offset employer contributions before offsetting administrative expenses (at least according to the suit).

And then there is a case that has been through severalrounds of adjudication—and though winning, has had to keep going back to court.  But HP finally prevailed, and though the actions regarding the application of forfeitures were seen as fiduciary decisions—well, there was a bit of a “new” twist in how the judge viewed them.

In this episode Nevin (Adams) & Fred (Reish) examine theissues and potential implications, as well as a quick review of some recent updates.

Episode Resources

Could plan fiduciaries violate their duty of loyalty to plan participants despite a prudent process?  A recent federal judge says yes. Nevin (Adams) & Fred (Reish) discuss.

With apologies to Charles Dickens, Nevin & Fred have done a special year-end tribute (of sorts) to the “ghosts” of retirement past, present – and future.

It’s the holiday season, and Santa isn’t the only one making a list and checking it twice.

Let’s face it, SECURE 2.0 has a LOT of good, interesting—and potentially complicated options.  But there are some that AREN’T optional, like the requirement that new plans adopted after the signing of the legislation into law have to automatically enroll eligible participants beginning in January 2025. 

What happens if you forget? What happens if the business is below the threshold—and then goes above it—and then slips below it?  And there’s something “special” about the selection of the default investment fund.  

And then, there’s the so-called fiduciary rule (also known as the Retirement Security rule).  Even if (and it’s still an “if”) it’s allowed to languish, there are still standards of care with regard to rollovers.

There are also some “nice” things in SECURE 2.0 with regard to the ability to fix things you don’t get right the first time.

In this engaging episode, Nevin (Adams) & Fred (Reish) will help you make sure your list is complete —and that you don’t wind up on the “naughty” list.

P.S.  Oh, and Fred Reish has gotten some AI assistance in composing a song about retirement (lyrics below)!  

Episode Resources:

On October 21, the dynamic podcasting duo of Nevin (Adams) & Fred (Reish) brought their engaging, informative, and occasionally alliterative discussion to ASPPA Annual.

As one might expect from a crowd composed of the nation's leading recordkeepers and third party administrators (and a bunch of experts that help them succeed), the discussion was, as always, wide-ranging, including constantly compelling topics like:

Latest Lessons from the Litigation Landscape – fending off fiduciary forfeiture suits

Fiduciary Faux Pas, Pitfalls and Best Practices

Scary stuff from SECURE 2.0 – implications of auto-enrollment for all plans, LTPT employee tracking, etc.

In a “live” version of the Nevin & Fred podcast at the Strategic Retirement Partners (SRP) annual conference, Nevin & Fred (& Bonnie Treichel & Tom Clark) covered recent litigation trends—and more!

In recent months, the plaintiffs’ bar has “discovered” a new litigation target:  the use of forfeitures to offset employer contributions, rather than to offset plan fees or to reallocate them to the remaining participants in the plan.  The expanded expert podcast panel reviews the current status, the trend(s), and what plan fiduciaries can/should do about it.

And—on a related topic—what should/shouldn’t be included in committee meeting minutes!

Episode Resources

The so-called fiduciary rule has been stayed—and legal challenges regarding forfeiture reallocation are picking up.  Nevin & Fred discuss what you should be doing…now.

On April 7, 2024, Nevin (Adams) & Fred (Reish) took their popular podcasting platform on the road to Nashville, Tennessee, for a live version at the NAPA 401(k) Summit—in the middle of a solar eclipse!

In the second part of an expanded session, the prolific podcasting pair pointed to some takeaways from recent litigation trends including:

Some recent suits – and federal court rulings – provide some timely reminders about the importance of a prudent process and following the plan document. 

In this podcast episode, Nevin (Adams) & Fred (Reish) discuss the background, issues, and implications behind:

Late last year a Pasadena, California, law firm launched a series of suits alleging that the use of forfeitures to offset employer contributions was a fiduciary breach. Nevin (Adams) and Fred (Reish) look at the issue(s) this raises. 

“If this is the law, then that would be news to Congress and the regulatory agencies, which have declared for decades that forfeitures can be used in this manner,” says a recent motion to dismiss a lawsuit alleging a fiduciary breach in offsetting employer contributions with forfeitures. 

On October 31, the Biden Administration rolled out its long-anticipated update to the fiduciary rule. While it’s got a new name (the Retirement Security Rule), it builds on and extends the Labor Department’s reach by both focusing on the needs and perceptions of the retirement investor and eliminating the “regular basis” aspect of the so-called five-part test that has long been an integral component of what was considered to define an ERISA fiduciary. 

In the latest episode Nevin (Adams) and Fred (Reish) consider the historical framework of the ERISA fiduciary definition, how the proposed rule would alter that, and what obstacles lie between that proposal and its ultimate adoption. 

At the 2023 NAPA/NTSA ERISA 403(b) conference, Nevin & Fred took the podcast LIVE to focus on the differences in SECURE 2.0 for 403(b) and 401(k) plans—with a special guest.  And then the focus turned to litigation. Since late 2016, nearly two dozen excessive fee lawsuits have been filed against major universities, raising many of the issues that had previously been raised regarding major 401(k) plans – but with some unique twists as well. That’s right, we closed out the 2023 NAPA/NTSA ERISA 403(b) conference with a live session joined by the inimitable Kelly Famiglietta and discussed: 

Late one recent Friday afternoon, the Department of Labor dropped off a package that would redefine fiduciary investment advice under the Employee Retirement Income Security Act (ERISA).  In this episode Nevin (Adams) and Fred (Reish) explore the possibilities – the history and potential future – of this initiative.

Known officially as “Conflict of Interest in Investment Advice,” according to a post on the Office of Management and Budget’s website, “this rulemaking would amend the regulatory definition of the term fiduciary...to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of section 3(21) of ERISA and section 4975(e)(3) of the Internal Revenue Code."

As part of that, it purports to consider advisor practices, plan sponsor and participant expectations, and IRA owners who receive investment advice. It would also consider “developments in the investment marketplace,” including compensation structures that could expose advisors to conflicts of interest – and evaluate available prohibited transaction class exemptions and propose amendments or new exemptions.

Attempts to update the regulation – given foundation by the Employee Retirement Income Security Act of 1974 (a.k.a. ERISA) and structure by regulations issued in 1975 (from which the 5-part test came) – are not new.  No fewer than four attempts to do so have been made in the past decade across three Administrations.

In this episode, Nevin & Fred look at those developments – both where we’ve been (and why), what’s changed (and hasn’t), and what the future for this latest iteration and its potential import might be. 

Episode Resources:

Summer may be winding down, but there’s been a LOT going on in the retirement world.  In this episode, Nevin (Adams) and Fred (Reish) run down the hot topics, and the implications behind these trends.

We’re talking about:

On April 3, the Nevin & Fred podcast went on the road to San Diego for a live appearance in front of a standing room only crowd at the NAPA 401(k) Summit. 

Along with their alliterative illustrations, Nevin (not Neville — Adams) & Fred (Reish) covered:

• Their favorite provisions of SECURE 2.0 — why — and how it matters to you (and the coverage gap).
• Why 2024 is just four months away.
• The implications of when a plan is “established.”
• The (potential) impact of the last SECURE 2.0 provision to take effect — and why you should be nice to your recordkeeper partners.
• A new industry acronym!

Episode Resources: 

Over the past several months –following the United States Supreme Court’s decision in Hughes v. Northwestern University – a number of cases, notably the Oshkosh case—and those of CommonSpirit and TriHealth—have brought with them what appears to be a higher standard of “plausibility” in asserting claims that can get past the standard motion to dismiss.

The SECURE 2.0 Act of 2022 was signed into law in the waning days of 2022.  But there are some things that need fixing – and some things you may have overlooked.  Nevin (Adams) and Fred (Reish) highlight five key areas calling for attention.

The short list of things covered in this episode:

• Deleted legislative text that could undermine catch-up contributions
• A typo(?) that could impact required minimum distribution (RMD) timing.
• Required vesting on employee elected Roth treatment of employer contributions
• Mandatory automatic enrollment on new plans – but not till 2025 – and with (potentially) rolling effective dates after that

Episode Resources

In the waning days of 2022, President Biden signed into law legislation that had moved through the House and the Senate on a strong bipartisan basis that greatly expands retirement savings opportunities for working Americans.

In this episode Nevin (Adams) & Fred (Reish) unpack some of the major provisions, and their implications for retirement.

Episode Resources

The U.S. Department of Labor has unveiled its much-anticipated final ESG rule that it says will allow “plan fiduciaries to consider climate change and other environmental, social and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting.”  The operative word for plan fiduciaries is MAY, not must consider ESG factors—a concern that had arisen in the wake of the proposed regulation previously issued.

Episode Resources

A recent flurry of lawsuits has "targeted" holders of the BlackRock LifePath target-date funds and their decision(s) to select, and hold, on their investment menu.  Ironically, the plan fiduciaries have been charged with "chasing low fees" with a disregard for the funds' performance - which the plaintiffs say was tracked against an inappropriate benchmark.  In this episode, Nevin & Fred look at the issues raised by - and the issues involved in - this new round of ERISA litigation.

Episode Resources