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Legal Updates

January 22, 2020 In 401(k), Compliance, Legal Updates

NWPS Perspective: The SECURE Act

Here is NWPS' memo to clients and advisor partners summarizing The SECURE Act and What It Means to Your Plan.  Here are a few key takeaways for those focused on retirement plans: Increases the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½) Allows long-term, part-time workers to participate in 401(k) plans Offers more options for lifetime income strategies Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses   Please contact your NWPS consultant or tobrien@nwp401k.com if you have any questions.

May 6, 2019 In Articles, Fees, Legal Updates, Uncategorized

BIG DATA Comes to 401k Plans

It’s no secret that the use of proprietary funds has been on a steady decline for years. As a result, the largest providers (mutual fund and insurance companies) are scrambling for new sources of revenue, including demanding shelf space (or the vaguely worded ‘infrastructure’) payments from fund companies and additional fees to plan sponsors and participants. Enter Big Data. The dominant providers in the 401(k) business (mutual fund and insurance companies) are mining participant data to reveal opportunities for cross-selling other financial products and services. While not a concern to Northwest Plan Services (NWPS), as we are not an asset gatherer and have nothing to sell to participants, this last effort (cross selling) is being examined in a new and significant light. Enter tort terror Jerome Schlichter, the notable protector of participant costs and now apparently, participant data. In the recent Vanderbilt University case, Schlichter and his clients, the participants of the University’s 403(b) plan, claim the University allowed excessive fees to permeate their plan. Plaintiffs then filed an amended complaint accusing the University of failing to protect plan data by allowing their service providers (at the time Fidelity, TIAA and 2 others) to market products and services to plan participants. Vanderbilt recently settled the

October 17, 2014 In Fiduciary, Legal Updates

Jerome Schlichter; Luke Skywalker or Darth Vader?

This excellent article by Darla Mercado provides background and commentary on Mr. Schlichter, founder of St. Louis based Schlichter Bogard and Denton. He is well known within the 401(k) industry for launching (and winning) a volley of lawsuits against 401(k) plan sponsors and providers, focused mostly on breach of fiduciary duty in the form of excessive fees and funds that are not in the plan participant’s best interests.

September 14, 2014 In Legal Updates

Fidelity sued by employees over 401k plan AGAIN

Reported over on the FRA PlanTools blog Fidelity is being sued by their own employees again. "The plaintiffs here generally allege that the fiduciaries to the Fidelity in-house plan violated ERISA sections 404 and 406 because Fidelity failed to rebate back the revenue sharing it collected from the all Fidelity mutual fund lineup in the plan beyond what would have been reasonable and permitted. The plaintiffs claim the plan should have negotiated a direct recordkeeping arrangement with Fidelty, like other large plans do. They claim that all the way back to 2007, a reasonable per head fee would have been $20-$27. Instead, they claim that Fidelity was collecting approximately $335 per head through the revenue sharing from the plan." This is the problem with bundling – even in the new era of full fee disclosure.  It is still way too hard to separate the cost of administration from the cost of investment management.  I can only hope that this continues to force the issue of full, clear and explicit fee disclosure for 401(k) service providers.