PLANADVISER - September/October 2017 - 19

is unlikely that the final regulations
will be published in time for plan sponsors
to make plan design decisions
accordingly, before expiration of the
relief provided under the two notices.
For that reason, the IRS and Treasury
Department felt it appropriate to
extend the relief for an additional year.
Morningstar and Prudential
Deny Racketeering
Another Employee Retirement Income
Security Act (ERISA) lawsuit has
emerged in federal court, this one
naming both Morningstar and various
Prudential companies as defendants in
the U.S. District Court for the Northern
District of Illinois.
The case is unique because it cites
both the Employee Retirement Income
Security Act (ERISA) and the Racketeer
Influenced and Corrupt Organizations
Law of 1970, known as RICO. The lead
plaintiff in the would-be class action
suit is an employee of Rollins Inc. and
a participant in the Rollins retirement
plan. The Rollins plan is a defined
contribution (DC) plan with assets of
roughly $500 million and more than
10,000 participants and beneficiaries,
case documents show. Defendants
are investment analysts, investmentrelated
software developers, investment
consultants, recordkeepers and
investment managers with respect to
the Rollins plan and other 401(k) retirement
plans across the country.
Specifically, the suit focuses on the
various groups that manage the planparticipant-level
automated
investment
advice program marketed under
the trade name GoalMaker.
" Plaintiff and the other participants
in the plans used and were injured by
this innocuous-sounding investment
advice program, which in reality was
a predatory racketeering enterprise
developed, maintained and marketed
by defendants, " the suit contends.
" Defendants'
so-called
investment
advice program gets retirement plan
investors to turn over the investment
management of their plan accounts to
defendant PRIAC. PRIAC, along with its
corporate siblings [that] facilitated the
instant racketeering scheme, is a core
part of the RICO racketeering enterprise
at issue here. "
It should be noted straightaway that
both Prudential and Morningstar have
filed extensive responses to the suit,
denying the charges here described
and requesting summary judgment
against the plaintiff. It is also relevant
to observe that the GoalMaker product
has been challenged unsuccessfully
in a federal district court before by a
disgruntled participant.
Lawsuit Against Deutsche Bank
A federal district court judge has
granted class certification to a sizable
group of Deutsche Bank employees
who have filed an Employee Retirement
Income Security Act (ERISA) challenge,
alleging self-dealing in the company's
retirement plan benefit.
The now class-certified case
comes out of the U.S. District Court
for the Southern District of New York.
The underlying allegations are that
Deutsche Bank and other defendants
violated their fiduciary duties by
offering, in the company 401(k) plan,
proprietary, high-cost investments
that profited the bank. This development
comes nearly a year after the
court rejected defendants' argument
that the lawsuit, filed in December
2015, should be time-barred by ERISA's
various statutes of limitation. The
bank otherwise denies the allegations.
DOL Secretary Urged
To Call for Auto-Portability
In a letter to Department of Labor
(DOL) Secretary R. Alexander Acosta,
U.S. Senator Tim Scott, R-South Carolina,
and other lawmakers requested
that the agency issue an advisory
opinion or other appropriate
guidance
regarding application of the
Employee Retirement Income Security
Act (ERISA) to automatic portability of
retirement savings.
The letter notes, " Retirement plan
cash leakage at the time of job change
is harmful to workers' retirement. "
It cites an Employee Benefit Research
Institute (EBRI) analysis, which found
that a clearinghouse that could automatically
roll over a participant's
retirement plan balance to a new
employer every time he changed jobs
would result in an additional $2 trillion
in retirement savings for all employees,
nationwide, by age 65.
A demonstration for PLANADVISER
by Retirement Clearinghouse showed
that, in just over 30 years, total cashouts
could reach $282 billion, and rollovers
to other qualified plans would
be only $14.7 billion among 8.4 million
participants. The firm's analysis did
not include appreciation, so these
amounts would be larger if average
returns were included. If auto-portability
were available, in just over 30
years, cash-outs would be reduced
to $144.3 billion, and rollovers would
be $133.5 billion among 77.5 million
participants.
In the letter, lawmakers ask that
Acosta use all of the resources at his
disposal to ensure the DOL examines
the issue of auto-portability and
provides guidance as soon as possible.
Hurricane Harvey Relief
Following up on a previous announcement,
the Pension Benefit Guaranty
Corporation (PBGC) has shared more
detail about its intent to waive certain
penalties and extend certain filing
deadlines in response to the Hurricane
Harvey disaster in Texas and Louisiana.
Technically speaking, this disaster
relief announcement provides relief
relating to PBGC deadlines to " designated
persons. " A " designated person "
is defined as " any person responsible
for meeting a PBGC deadline (e.g., a plan
administrator or contributing sponsor)
that is located in the disaster area for
which the Internal Revenue Service
(IRS) has provided relief in TX-2017-09,
in connection with filing extensions
for Form 5500 series returns, or cannot
reasonably obtain information or other
assistance needed to meet the deadline
from a service provider, bank, or other
person whose operations are directly
affected by the severe storms and
flooding from Hurricane Harvey that
began on August 23, 2017, in Texas. "
In TX-2017-09, the IRS provides
relief for taxpayers who reside or have
a business in the disaster area and,
who because of the disaster, needed
extensions for filing Form 5500 series
returns. -PA
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PLANADVISER - September/October 2017

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