PLANSPONSOR - April - May 2022 - 7

order to survive as a plausible lawsuit.
Euclid urges the courts to demand
accountability by requiring that all excessive
fee lawsuits use the true plan fees and
investments from regulated fee disclosures.
In addition, the insurer urges that
the actual fees must be judged against
valid, third-party fee benchmarks and not
plaintiff-contrived comparators.
The purpose of the white paper is
to give perspective on low-fee plans vs.
high-fee plans and those using a prudent
process. Aronowitz also notes that Euclid
feels defense attorneys are treating every
case in the same way. " We're telling them
not to do that, " he says. " Courts need to be
told when claims are implausible. Defense
lawyers can fight suits where plan sponsors
have done [requests for proposals]
and followed their fiduciary duties. Fight
in those cases. "
He points out " a Catch-22 " presented
by some lawsuits: In these, plan sponsors
have followed a fiduciary process and
made a change they felt would be better
for participants, and plaintiff law firms
then claimed the change is evidence
that the fiduciaries knew something was
wrong. " Those plan sponsors shouldn't be
sued, " Aronowitz says. " If they're allowed
to be sued, no one is safe. "
The Employee Retirement Income
Security Act's statute of limitations can
create a huge problem, he says, adding that
the Form 5500 database is one-and-a-half
to two years behind, so plaintiffs' attorneys
are always looking back. " [Attorneys]
should be sanctioned for bringing frivolous
lawsuits against someone that is
doing the right thing, " he says.
This is not to say that some lawsuits
are not legitimate-some plans do have
high fees, he says, and the paper makes
this point. But, he says, it aims to provide
context on which cases defense attorneys
should file a motion to dismiss and on
which they should not.
" Based on what we see, judges cite
our content [in decisions], so we put out
information hoping judges and law clerks
see it, " he says. -Rebecca Moore
More From Washington
And the Courts
403(b) Document Guidance
For Preapproved Plans
In Revenue Procedure 2019-39, the IRS
established a recurring remedial amendment
period for 403(b) plans. The submission
period for Cycle 2 applications begins
this May 2 and ends next May 1.
To help with document restatement,
the IRS has published a " Listing of
Required Modifications and Information
Package " for 403(b) preapproved plans.
The information package contains samples
of plan provisions that have been found to
satisfy certain requirements of Internal
Revenue Code Section 403(b) and related
regulations. The IRS says it has prepared
the package to assist providers that are
drafting 403(b) preapproved plans and to
accelerate the agency's review of them.
The information package has been
updated to reflect the 2022 Cumulative
List of Changes issued by the IRS in
January. Although the package is intended
to assist 403(b) preapproved plan providers
in drafting plan documents, the IRS says
insurance companies and custodians may
also look to the language of the sample
provisions in drafting terms of annuity
contracts and custodial accounts that IRC
Section 403(b) requires. The agency also
notes that a 403(b) preapproved plan may
use either a single plan document format
or a basic plan document with an adoption
agreement; the sample provisions
included in the package may generally be
used with either format. However, it says,
a plan design using a single document
format will need to make appropriate
adjustments.
The comprehensive package contains
general sample plan provisions applicable
to: plans that accept elective deferrals
contributions exclusively; plans that accept
contributions beyond just elective deferrals;
standardized and nonstandardized
403(b) preapproved plans; and retirement
income accounts.
Noting that certain 403(b) preapproved
plans might be covered by Title
I of the Employee Retirement Income
Security Act, the IRS says it has no jurisdiction
over Title I, so the package does
not contain sample Title I plan provisions.
However, as the agency has sample plan
provisions to enable Section 401(a) preapproved
plans to comply with IRC qualification
requirements having parallel Title
I requirements, the information package
contains links to help drafters of 403(b)
plans comply with Title I.
The House Passes
'SECURE 2.0'
The U.S. House of Representatives passed
the Securing a Strong Retirement Act,
aka SECURE Act 2.0, at the end of March.
This marks an important step forward for
the ambitious retirement-focused legislation
package. The final vote on the bill
was 414 to 5.
In a host of ways, the bill expands
given by the
on benefits
SECURE-Setting Every
original
Community
Up for Retirement Enhancement-Act
of 2019, increasing access to workplace
retirement plans and protected lifetime
income products. If passed by the Senate
in its current form, the bill would expand
automatic enrollment in 401(k) plans by
requiring them, along with 403(b) plans
and SIMPLEs-i.e., savings incentive
match plans for employees-to automatically
enroll participants when they
become eligible, provided they may opt
out of coverage. Notably, in the version of
the bill that passed the House, existing
retirement plans are exempt from this
rule. The bill's supporters say this significant
expansion of automatic enrollment
will meaningfully increase participation
PLANSPONSOR.COM April - May 2022 7
http://www.PLANSPONSOR.COM
PLANSPONSOR - April - May 2022

Table of Contents for the Digital Edition of PLANSPONSOR - April - May 2022
