PLANSPONSOR - May - June 2023 - 7

the tax benefits of being able to stretch
those health-care dollars further. "
According to Medicare Interactive,
those who are currently enrolled in
Medicare Part A and/or Part B may not
contribute pre-tax dollars to an HSA
because, to do so, one's medical insurance
must be an HDHP. Medicare participants
may, however, continue to withdraw
money from an account after enrolling
in Medicare to pay for expenses such as
deductibles, premiums, co-payments and
coinsurances.
The Health Savings for Seniors Act
was first introduced in April 2022 and
is backed by Representative Ami Bera,
D-California, and Representative Jason
Smith, R-Missouri. The bill was not
voted on last year, but Robertson says it is
expected to be reintroduced to Congress at
the end of April. -Remy Samuels
LinkedIn Settles 401(k)
Excessive Fee Suit
LinkedIn Corp., a social media company
owned by Microsoft Corp., settled over
allegations made by participants in its
401(k) profit sharing plan and trust that
it did not try to reduce plan expenses or
scrutinize investment options closely
enough within the plan, according to a
settlement agreement filed on March 3 in
the U.S. District Court for the Northern
District of California.
" This is another in a growing group
of lawsuits in which the plaintiffs allege
that plan fiduciaries imprudently chose
funds with excessive fees as investment
options under a 401(k) plan, " Andrew
Oringer, partner and general counsel
with The Wagner Law Group, wrote.
" The plaintiffs and their attorneys have
an interest in settling, in that the chance
of actually prevailing on such a factsensitive
claim is generally speculative
at best. "
The plaintiffs alleged in part that
LinkedIn's plan administrators failed to
use the lowest-cost share class for many
of the mutual funds in the plan and failed
to consider certain collective investment
trusts available as lower-cost alternatives
to the mutual funds.
The plaintiffs called out the Fidelity
Freedom Funds target-date fund series
in their complaint. They alleged that
LinkedIn should have considered a
cheaper, index-linked version, as opposed
to an actively managed one, among other
potential lower-cost options that would
have saved participants millions of dollars.
They also alleged that the plan had
conflicts of interest because Fidelity was
both the recordkeeper of the retirement
plan and the asset manager for the fund
series. This placed Fidelity " in positions
that allowed them to reap profits from the
plan at the expense of plan participants, "
the complaint alleged.
Neither LinkedIn nor Fidelity
responded to a request for comment on
the settlement.
Mutual of America 401(k)
Lawsuit Settles
Mutual of America and retirement plan
plaintiffs have agreed to terms of a
proposed settlement in Goldstein et al v.
Mutual of America Life Insurance Co. in
the U.S. District Court for the Southern
District of New York.
Mutual of America was alleged
to have breached the fiduciary duties
of loyalty and prudence by selecting a
proprietary, closed-architecture recordkeeping
platform for its retirement plan.
The plaintiffs alleged that the insurer
caused plan participants to pay excessive
administrative and recordkeeping fees
by retaining a proprietary recordkeeping
platform and that the company was
imprudent and disloyal in its preference
for proprietary funds within the plan,
despite the fund's poor performance and
high costs.
Under the plan of allocation, the
net settlement amount will be divided
between the recordkeeping claim (25%)
and the investment claim (75%), according
to the filings. Mutual of America did not
respond to a request for comment.
529 Plans as a Financial
Wellness Option
The Setting Every Community Up for
Retirement Enhancement 2.0 Act permits
excess 529 plan assets to be rolled into a
Roth individual retirement account, subject
to the normal IRA annual contribution
limits. This makes the risk of an individual
being unable to access excess savings in a
college savings plan without incurring the
10% withdrawal penalty less likely; this
possibility had been a deterrent to starting
a 529 in the first place. The provision also
makes 529 plan benefits potentially more
attractive as a workplace benefit and tool
for recruitment and retention.
Improved access to tax-preferred
college savings plans, or 529s, may be
offered as a " low-cost and effective " benefit
for a multigenerational workforce, says
Barrett Scruggs, the vice president of
workplace financial well-being at SoFi at
Work. Financial wellness for people paying
back student debt is important for plan
sponsors. College expenses are not just a
concern for students and recent graduates.
They are also one for employees with or
expecting to have children or grandchildren,
since many in those groups want to
begin saving for their higher education.
Employers may offer 529 plan benefits
as part of a comprehensive financial
wellness program that appeals to
employees from different age groups and
with different financial wellness needs,
says Scruggs. Employers " know they have
to do something " as it relates to college
savings and financial wellness in light of
changes made by SECURE 2.0. Though
the student loan match has taken much
of the attention, offering a 529 is a more
appealing investment now that SECURE
2.0 allows excess savings to be rolled into
a Roth IRA. -PS
For in-depth coverage of these topics and more, go to PLANSPONSOR.com/compliance.
PLANSPONSOR.COM May - June 2023 7
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