PLANSPONSOR - December/January 2021 - 5

More From Washington and the Courts
2020 Form 5500 Updates
The Department of Labor (DOL)'s
Employee Benefits Security Administration
(EBSA), the IRS and the Pension
Benefit Guaranty Corporation (PBGC)
have released advance informational
copies of the 2020 Form 5500 series,
which includes Form 5500-SF and IRS
Form 5500-EZ. All may be found on
EBSA's website. The instructions for each
form highlight important modifications
to the forms themselves, their schedules
and instructions.
DOL Publishes Final
Fiduciary PTE
The Department of Labor (DOL) has
published the final version of a new
prohibited transaction exemption (PTE).
The text of the exemption notice stretches
to nearly 300 pages, but a review suggests
the final version resembles the version
proposed this summer. The text of the
notice also reiterates the DOL's reinstatement
of the traditional " five-part test " for
determining fiduciary status.
Under the five-part test, assistance
or instruction constitutes " fiduciary
investment advice " when the financial
institution or investment professional
who is not a fiduciary under another
provision of the law meets five stipulations.
According to the fact sheet, the
new proposed class exemption would
be available to registered investment
advisers (RIAs), broker/dealers (B/Ds),
insurance companies, banks and individual
investment professionals who are
their employees or agents.
Amended Lawsuit Repeats
Claim Against Abbott Labs
After a district court dismissed, on procedural
grounds, Abbott Laboratories from
a cybersecurity lawsuit, the plaintiff filed
a first amended complaint, in October. In
it, she says the defendants-Abbott; the
named plan administrator; and the plan's
recordkeeper, Alight Solutions-failed
to enforce a security-question procedure
on Abbott's benefits website and instead
simply provided a one-time code over the
phone, enabling a cyberthief to loot her
retirement plan account of $245,000. The
complaint also points to other instances
of unauthorized distributions in Alightrecordkept
retirement plans, including
when the company operated as Aon Hewitt,
and says the defendants had neglected to
monitor the company despite these and
other inadequacies. On rejecting the original
suit, filed in April, the judge wrote that
the plaintiff had failed to sufficiently allege
that Abbott was a fiduciary.
Lawsuit Against TIAA
Wins Certification Status
The District Court for the Southern
District of New York has granted class
certification in a lawsuit seeking to
recover money TIAA allegedly " unlawfully
took " from retirement accounts in
the Washington University Retirement
Savings Plan and across the company's
U.S. business.
The lawsuit, filed in 2017, explains
that the plan lets participants borrow
against their retirement account; TIAA
and Vanguard administer the loans.
With the TIAA loans, participants must
transfer 110% of the loan amount from
their account to the defendant's Traditional
Annuity, which pays a fixed rate of interest
and serves as the collateral. The participant
repays the loan to TIAA's general account,
which also earns the interest paid on the
loan. The company retains some of that
money for loan administration.
The lawsuit alleges violations of the
Employee Retirement Income Security
Act (ERISA)'s prohibited transaction
rules. Whereas in 2018, the judge
dismissed many of the claims, he has
now granted the certification, noting that
7,926 plans, tens or hundreds of thousands
of participants, and over 460,000
loans were affected.
Plan Investments Were
'Too Conservative'
A settlement agreement has been filed in
an Employee Retirement Income Security
Act (ERISA) fiduciary breach lawsuit
against DeMoulas Super Markets and
several of its top executives. Among its
terms, the settlement calls for $17.5 million
to be paid and disbursed to the plan and its
participants by an independent fiduciary.
In April, a federal district court
judge had denied the defense's motion
to dismiss the suit, in which the plaintiffs
alleged the profit-sharing plan
invested its assets too conservatively for
its employee base and failed to prudently
manage plan investments. DeMoulas
Super Markets and its executives admit
no wrongdoing in the settlement, which
bars future related claims by settlement
class members.
According to court documents, the
DeMoulas (Restated) Profit Sharing Plan
and Trust had approximately 11,000 to
13,000 participants during the proposed
class period, " with a wide range of retirement
needs and objectives. " According
to the plaintiffs, the plan's investment
policy statement (IPS) called for 70% of
participants' plan assets to be automatically
allocated to domestic fixed-income
options and 30% to equities. They alleged
that the plan's " one-size-fits-all " default
target allocations were inappropriate
even for participants nearing retirement,
but especially for those decades away.
The settlement requires defendants
to modify the IPS to increase returns.
Unlike in other cases, this plan is 100%
employer funded, showing that fiduciary
liability can arise even when employee
dollars are not at stake.
PLANSPONSOR.COM December 2020 - January 2021 5
http://www.PLANSPONSOR.COM
PLANSPONSOR - December/January 2021

Table of Contents for the Digital Edition of PLANSPONSOR - December/January 2021
