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Proposed legislation

Post-Hughes v. Northwestern – plaintiffs win in three motion-to-dismiss decisions

On January 24, 2022, in a unanimous decision, the Supreme Court vacated the Seventh Circuit’s decision in Hughes v. Northwestern – an ERISA prudence case implicating a number of issues that have been raised in 401(k) fee litigation. The Court rejected the Seventh Circuit’s reliance on the availability of lower cost alternatives as a defense to claims that the cost of certain funds and of plan recordkeeping was unreasonably high, remanding the case for consideration under the rule in Tibble v. Edison, that a fiduciary has an obligation to remove imprudent investments.

SECURE 2.0 Approved by House in 414-5 vote

On March 29, 2022, the House of Representatives, by a nearly unanimous (414-5) vote, approved the Securing a Strong Retirement Act of 2022 (SECURE 2.0). The bill represents a synthesis of the Ways and Means Committee’s Securing a Strong Retirement Act of 2021 and the Education and Labor Committee’s RISE Act.

Democrats introduce mandatory 401(k) plan reenrollment legislation

On February 18, 2022, Senator Kaine (D-VA) (in the Senate) and Representative Manning (D-NC) (in the House) introduced the Auto Reenroll Act of 2022, a bill that would require 401(k) plans taking effect in 2025 or after to provide for a 3-year reenrollment of non-contributing participants in order to take advantage of the automatic enrollment testing safe harbor, allow certain “permissible withdrawals,” or assert state preemption for default contributions.

Outlook 2022 – The Retirement Policy agenda – Highlights

In this article, we briefly consider the 2022 retirement policy legislative, regulatory, and litigation agenda. Most of these issues are carryovers from 2021, and we have discussed them at length elsewhere. We are, therefore, going to keep our preview of 2022 brief, focusing on the “highlights,” and providing links to our prior, more comprehensive treatment.

Parsing DOL Guidance On Private Equity In DC Plans

In June 2020, the (Trump Administration) Department of Labor issued an Information Letter with respect to the inclusion of private equity investments as a “component” of a fund (e.g., a target date fund) included in a fund menu in a participant directed defined contribution plan. On December 21, 2021, the (Biden Administration) DOL issued a “Supplemental Statement” with respect to the 2020 Information Letter, qualifying and limiting the application of the (2020) Information Letter in some respects.

The Supreme Court sends Hughes v. Northwestern back to the Seventh Circuit

On January 24, 2022, in a unanimous decision, the Supreme Court vacated the Seventh Circuit’s decision in Hughes v. Northwestern (an ERISA prudence case implicating a number of issues that have been raised in 401(k) fee litigation). The Court rejected the Seventh Circuit’s reliance on the availability of lower-cost alternatives as a defense to claims that the cost of certain funds and of plan recordkeeping was unreasonably high, remanding the case for consideration under the rule in Tibble v. Edison, that a fiduciary has an obligation to remove imprudent investments.

2021 Retirement Policy – A Year In Review

Throughout the year, we have followed the performance of the interest rate and securities markets, tracking their effect on retirement finance. As of mid-December, interest rates are up 30-40 basis points for plans with typical duration, and the S&P 500 is up 25% on the year.