Prime Capital Retirement

What consequences of this election relative to retirement plans? It’s fair to say that the latest fiduciary rule is dead. Hopefully, savers view their retirement plan as the backbone of their financial plan and intend to leave their savings under the “fiduciary watch” anyway, taking advantage of group purchasing power, protection from creditors, et cetera. As mentioned in this week’s article, the rules around ESG investing face another change. And the treatment of adequate consideration for ESOPs is intriguing - more on that next week. #401k #ERISA #ESG #ESOP #Fiduciary #FiduciaryFriday #FF111524

I'm just considering... Politics? Nah, let's stick with ERISA. Did you see that Quest Diagnostics won its lawsuit on summary judgment? After failing to win its motion to dismiss in 2021, the federal court granted Quest summary judgment in September. In the process, the court provided a roadmap for fiduciaries to consider (if not follow) and stated this: "In assessing this duty, courts look at a fiduciary’s 'process rather than results'[.]” Are you an investment committee member overseeing the retirement plan at work? If so, consider printing the court's ruling and sharing it with your committee members at your next meeting. Do you make retirement plan decisions at work and need to know whether you're a fiduciary? If so, we should talk. That's especially true if the word fiduciary is hazy to you, and your organization allows employees to save at work. #HireAFiduciary #401k #ERISA #ClassAction #FiduciaryFriday #FF110824

Which of the dreaded "D" words may apply in the increasingly common arena of ESOP litigation? Dilution. This week's post concerns a claim that existing ESOP owners were disadvantaged in a re-leveraging transaction. If you're managing an ESOP and that's a topic, good counsel and review of Field Assistance Bulletin No. 2002-01 (FAB 2002-01) are advised. #ClassAction #ESOP #TheNationalLawReview #Fiduciary #FiduciaryFriday #FF110124

My favorite question this week: We bumped over the 100 employee limit, so what happens with our SIMPLE? Fortunately, the Code provides a grace period of two years, unless the limitation is exceeded through an acquisition. And there are many reasons to like SIMPLEs: no loans, no 5500s, and easy payroll integration. With other retirement plans, employees can certainly save more than the $16,000 SIMPLE limit. But SIMPLES make sense for many small businesses and, as applicable, you avoid the growing state mandates. #SIMPLEplan #Fiduciary #FiduciaryFriday #FF101824

Should we return to traditional pension plans as the backbone of retirement savings? An increasing number of voices and trends seem to be?leaning toward, if not advocating for, this position. An example is retirement income solutions for DC plans (401k, 403b, and 457). IBM's recent decision to revamp its cash balance plan is another. Criticisms of "401k world" include: 1) leaving the lowest income workers behind with their inability to save, 2) the foolishness of providing daily liquidity to potentially reactive investors, and 3) the failure of Open Architecture to provide improved investment results. Such a return makes sense with meaningful change in the law: isolate pension plan assets and insulate the company balance sheet from the pension liability. To me, it's the latter issue that's resulted in CFOs wanting to jettison the pension plan—that liability can seriously impair a company's balance sheet and dwarf the results of operations. And yet, this oversight from sophisticated financial players is needed while keeping the retirement plan savings system private. Secure 3.0, anyone? #401k #PensionPlans #RetirementIncome #Fiduciary #FiduciaryFriday #FF062824 #FF101124