PLANADVISER - May/June 2021 - 5

or regulatory measures that could
protect plan participants?
Complementary 'SECURE 2.0'
Legislation
A bipartisan trio of senators has introduced
a bill called the Improving Access
to Retirement Savings Act, which,
among other goals, would extend new
retirement plan choices to nonprofit
groups and expand and clarify incentives
to encourage small businesses to
offer plans to their employees.
The legislation parallels, but does
not exactly match, the Securing a
Strong Retirement Act, a piece of legislation
recently introduced in the House
of Representatives and a recipient of a
unanimous affirmative vote from the
House Ways and Means Committee.
Lawmakers in the House have taken
to calling the bill " SECURE 2.0, " recognizing
how it builds on the Setting
Every Community Up for Retirement
Enhancement (SECURE) Act.
Sponsors of the Improving Access
Savings Act include
to Retirement
Senator Chuck Grassley, R-Iowa;
Senator Maggie Hassan, D-New Hampshire;
and Senator James Lankford,
R-Oklahoma. The legislators say their
bill provides common-sense, bipartisan
solutions that will help address
the challenges and obstacles that
continue to inhibit adequate saving and
make it difficult for people to manage
their income during retirement.
Passage of SECURE 2.0 in the full
House and passage of the Improving
Access to Retirement Savings Act in
the Senate could lead to a reconciliation
process that would eventually
see a compromise piece of legislation
become law.
2022 HSA Contribution Limits
Are Inflation-Adjusted
The IRS has published Revenue Procedure
(Rev. Proc.) 2021-25, setting the
2022 inflation-adjusted amounts
for contributions to health savings
accounts (HSAs), as determined under
Section 223 of the Internal Revenue
Code (IRC). For calendar year 2022, the
annual limitation on deductions for
an individual with self-only coverage
under a high-deductible health plan
(HDHP) is $3,650, up $50 from this year's
limit. The annual limitation on deductions
for an individual with family
coverage under an HDHP is $7,300,
up $100. The new revenue procedure
defines an HDHP for calendar year
2022 as a health plan with an annual
deductible that is not less than $1,400
for self-only coverage or $2,800 for
family coverage, and for which annual
out-of-pocket expenses-i.e., deductibles,
co-payments and other amounts,
but not premiums-do not exceed
$7,050 for self-only coverage or $14,100
for family coverage.
Wells Fargo 401(k) Self-Dealing Suit
A federal district court judge has
moved forward a lawsuit alleging
that Wells Fargo 401(k) plan fiduciaries
should have been able to obtain
superior investment products at a
very low cost but instead chose proprietary
products for their own benefit,
increasing fee revenue for the company
and providing seed money to newly
created Wells Fargo funds.
The lawsuit, filed in March 2020,
claims that, upon the creation of the
Wells Fargo/State Street Target CITs
[collective investment trusts] in 2016,
the committee defendants added the
CITs to the plan even though the funds
had no prior performance history or
track record that could demonstrate
they were prudent. Despite the lack of
a track record, the committee defendants
" mapped " nearly $5 billion of
participant retirement savings from
the plan's previous target-date option
into the Target CITs.
In addition, the plaintiff alleges that
the committee defendants used the
plan's assets to seed the Wells Fargo/
Causeway International Value Fund,
as evidenced by the fact that the plan's
assets constituted over 50% of the total
assets in the fund at year-end 2014.
" Without such a substantial investment
from the plan, Wells Fargo's ability to
market its new, untested fund would
have been greatly diminished, " the
complaint states.
The lawsuit further alleges that
plan fiduciaries selected and retained
for the plan 17 Wells Fargo proprietary
funds, many of which underperformed
the benchmark that the defendants
selected as an appropriate broad-based
market index for each fund.
The defendants argued that the
fiduciary breach allegations should
be dismissed because they fail to give
rise to an inference of imprudence or
disloyalty. The defendants
said the
Target Date CITs and the Causeway
fund could not have been offered to
generate seed money when the Target
CITs were designed exclusively for the
plan, and the investment manager of
the Causeway fund was unaffiliated
with Wells Fargo. They also argued that
the Target CITs were modeled after two
other substantially similar investments
with extensive track records.
The defendants said the plaintiff
failed to identify suitable comparators
to establish that the Wells Fargo funds
charged excessive fees. However, Judge
Donovan W. Frank of the U.S. District
Court for the District of Minnesota
decided that the plaintiff's " numerous
and specific allegations are sufficient
to support an inference of imprudence
and disloyalty. "
Frank also found that the plaintiff
plausibly pleaded that the defendants
engaged in transactions prohibited
under the Employee Retirement
Income Security Act (ERISA). He said
the plaintiff plausibly alleged that
the defendants caused the plan to
purchase property in Wells Fargoaffiliated
funds from Wells Fargo
and Wells Fargo Bank, which are
parties-in-interest; that defendants
Wells Fargo Bank and Galliard Capital
Management caused the transfer
of plan assets to Wells Fargo and its
affiliates through fees associated with
the Wells Fargo funds; and that Wells
Fargo and Galliard seeded newly
launched funds and directed revenue
to Wells Fargo from the plan's assets
through fees.
" The court finds that [the plaintiff's]
allegations are far more than
general assertions and that, accepted
as true, show that defendants engaged
in prohibited transactions, " Frank
wrote in his opinion. " The court similarly
finds that whether any prohibited
transaction exemption applies to [the
plaintiff's] claims is an affirmative
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PLANADVISER - May/June 2021

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