PLANSPONSOR - December/January 2020 - 8

RULES & REGULATIONS
SECURE Act Passes
T
he Setting Every Community Up
for Retirement Enhancement Act,
better known as the SECURE Act,
was signed by President Donald Trump
on December 21. Technically, the SECURE
Act was incorporated into a broader 2020
fiscal year appropriations bill.
Through a laundry list of popular
bipartisan provisions, the SECURE Act
expands and modernizes the defined
contribution (DC) retirement plan system.
Through the establishment of open
multiple employer plans, or open MEPs,
the SECURE Act provides for millions
more full- and part-time workers, particularly
small-business employees, to have
access to a workplace retirement plan.
The legislation also expands opportunities
for workers to obtain guaranteed lifetime
income products, increases the age at
which required minimum distributions
(RMDs) must be taken from retirement
accounts and repeals the age limit for individual
retirement account (IRA) contributors.
Additionally, the act will require that
plan participants receive an illustration of
how much monthly income their retirement
savings will provide, which can help
them plan to increase their retirement
savings.
Further, the SECURE Act enhances
the automatic escalation plan feature used
by some plan sponsors. It allows qualified
automatic contribution arrangement
(QACA) safe harbor plans to increase the
cap on automatically raising payroll contributions
from 10% to 15% of an employee's
paycheck, with the option to opt out.
-John Manganaro
More From Washington
And the Courts
SCOTUS Takes on Sulyma v. Intel
The U.S. Supreme Court (SCOTUS) has
reviewed the case of Sulyma v. Intel Corp.
Investment Policy Committee, et al.
A participant in the Intel 401(k) plan
had claimed that plan fiduciaries' decision
to increase the allocation of alternative
investments in the plan's target-date funds
(TDFs) violated the Employee Retirement
Income Security Act (ERISA)'s duty of
prudence and led to higher fees and lower
investment returns. The participant also
alleged that fiduciaries failed to adequately
disclose the risks, fees and expenses associated
with the alternative investments.
In 2017, a U.S. district court agreed
with Intel's argument that the lawsuit was
filed after ERISA's statute of limitations,
but the 9th U.S. Circuit Court of Appeals
reversed the decision and remanded it
back to the lower court. The Appellate
Court held that the plaintiff would have
needed to " have actual knowledge, rather
than constructive knowledge " and asked
the district court to determine whether
8 PLANSPONSOR.COM December 2019 - January 2020
Art by Helena Covell
Sulyma had the knowledge required to
dismiss the case as untimely.
As the 9th Circuit's decision was in
conflict with decisions in other circuits,
the Supreme Court was asked to answer
whether the provision of plan documents,
in itself, creates for participants " actual
knowledge " of an alleged fiduciary breach
under ERISA.
According to Willy Jay, a partner in,
and co-chair of, Goodwin Procter's appellate
litigation practice, and Jaime Santos,
a partner in the firm's appellate litigation
practice, one of the defendants' primary
arguments to the Supreme Court was
that this statute of limitations provision
is unique for a reason. They argued that
ERISA creates very detailed and fairly
burdensome disclosure requirements for
plan fiduciaries-requirements that are
specifically designed to give plan participants
all the information they would need
to vindicate their rights under the statute.
The attorneys say several matters
received special attention from the
justices. " First, they were clearly trying
to test the question of whether simply
accepting the plaintiffs' argument that
they lacked sufficient subjective awareness
of the type they say is required
by the law to prove 'actual knowledge'
would render the three-year statute
virtually ineffective, " Jay says. " Second,
there was substantial discussion of
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PLANSPONSOR - December/January 2020

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