Archives: Retirement Plans

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The Quandary of Publicly-Traded Employer Stock in a 401(k) Plan

Offering employer stock in a 401(k) plan investment lineup can seem like a win-win situation. It can enable employees to become company owners—real, skin-in-the-game, participants in their employer’s economic future—through a simple deferral election. The U.S. Supreme Court has even recognized the value of employer stock funds, confirming that Congress sought to encourage their creation … Continue Reading

Supreme Court Rules in Favor of Church-Affiliated Hospitals in Church Plan Litigation

In a major victory for church-affiliated hospitals, the US Supreme Court overturned three appellate court rulings and decided unanimously that church-affiliated hospitals can maintain their pension plans as “church plans” exempt from the Employee Retirement Income Security Act of 1974, as amended (ERISA), regardless of whether a church actually established the plan. Impacted health systems, … Continue Reading

Partial Victories to Two Universities in Their Motions to Dismiss Code Section 403(b) Fee Litigation

Multiple large, class action lawsuits have been filed against prominent higher education institutions claiming fiduciary breaches under their Code Section 403(b) plans as a result of insufficient oversight of plan investments, which allegedly caused excessive fees to be paid by participants. Last week, district courts in Georgia and North Carolina, respectively, ruled on defendants’ motions … Continue Reading

Upcoming Employee Benefits Innovators Roundtable Series!

McDermott will be holding its annual Employee Benefits Innovators Roundtable Series this month. The roundtables offer experienced benefits professionals an opportunity to discuss cutting-edge, topical employer-driven benefit programs with their peers and members of McDermott’s employee benefits team. We are meeting in four locations this year. Join us in one of the following cities: May … Continue Reading

State-Run Retirement Plans – What Labor Allowed

With approximately 68 million US employees without access to a retirement savings plan through an employer, there has been increased movement by states to sponsor retirement type arrangements for private sector employees. Partner Andrew Liazos presented “State-Run Retirement Plans – What Labor Allowed” discussing insights and strategies for retirement, health and executive compensation plans. He … Continue Reading

Employee Benefits Programs in May

Join members of the McDermott Employee Benefits team in May at one of these programs covering a variety of employee benefits topics. The John Marshall Law School The Center for Tax Law & Employee Benefits 14th Annual Employee Benefits Symposium | May 1, 2017 | Chicago, Illinois | Speaker, Joseph S. Adams Proposed 457(f) Regulations: Opportunities and … Continue Reading

Puerto Rico Legislation May Require Changes to Retirement Plans

Puerto Rico enacted new legislation in February that will require changes to tax-qualified retirement plans covering Puerto Rico employees, including both Puerto Rico-only and dual-qualified (US and Puerto Rico) retirement plans. Act No. 9-2017 revises a number of Puerto Rico qualified retirement plan rules including contribution limits, rules related to nondiscrimination testing and employer deductions … Continue Reading

IRS Will Now Permit DC Plan Hardship Withdrawal Self-Certification Summaries

Two recently published memoranda by the Internal Revenue Service (the IRS) indicate that it is permissible for 401(k) and 403(b) plan sponsors and their third party administrators (TPAs) to rely on participants’ written summaries describing their financial hardships when processing hardship withdrawals from plans that apply the safe harbor event rules. Plan sponsors and TPAs … Continue Reading

Proposed Regulations Update Mortality Tables, Minimum Present Value Requirements for Defined Pension Plans

Near the end of 2016, the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) published two significant sets of proposed regulations on issues pertaining to defined benefit pension plans, including mortality table updates that likely would increase pension funding liabilities for many plan sponsors. Read the full article.… Continue Reading

DOL Proposes 60-Day Delay of Fiduciary Rule in Response to White House Directive

The future of the fiduciary rule—originally set to be implemented this upcoming April—remains uncertain after the White House directed the United States Department of Labor (DOL) to reevaluate, defer implementation and consider rescinding the controversial new fiduciary rule on February 3, 2017. In response to the White House, the acting US Secretary of Labor announced … Continue Reading

Structuring Private Equity Deals in 2017: Considerations for Buyers While They Wait for the Sun Capital Appeals to Play Out

Sun Capital Partners III, LP v. New England Teamsters and Trucking Industry Pension Fund has been analyzed extensively over the past four years, as it has made its way from the US District Court for the District of Massachusetts to the First Circuit Court of Appeals and back again. With the case once again on appeal, … Continue Reading

Considerations in Designing Severance Plans and Arrangements for Tax-Exempt Organizations

There are numerous reasons why organizations exempt from taxation under Internal Revenue Code Section 501(c) (3), as amended (the “Code” and, such organizations, “Tax-Exempt Entities”) may offer severance payments to employees who incur involuntary terminations of employment. For example, severance that is conditioned on the departing employee’s execution of a release of claims in favor … Continue Reading

White House Urges Suspension of DOL Fiduciary Rule

The future of the fiduciary rule—originally set to be implemented this upcoming April—remains uncertain after the White House directed the United States Department of Labor (DOL) to reevaluate, defer implementation and consider rescinding the controversial new fiduciary rule on February 3, 2017. In response to the White House, the acting US Secretary of Labor announced … Continue Reading

White House Urges Suspension of DOL Fiduciary Rule

The future of the fiduciary rule—originally set to be implemented this upcoming April—remains uncertain after the White House directed the United States Department of Labor (DOL) to reevaluate, defer implementation and consider rescinding the controversial new fiduciary rule on February 3, 2017. In response to the White House, the acting US Secretary of Labor announced … Continue Reading

Highlights of Record Retention Requirements Applicable to Employee Benefit Plans

In the presentation “Highlights of Record Retention Requirements Applicable to Employee Benefit Plans,” Todd A. Solomon detailed the general rules of The Employee Retirement Income Security Act of 1974 (ERISA). He discussed several specific record-keeping requirements for employee benefit plans and a number of general requirements that imply a duty to retain records, for example … Continue Reading

DOL Finalizes New Disability Claim Rules for Welfare and Retirement Benefit Plans

The US Department of Labor’s Employee Benefit Security Administration recently released final rules on the adjudication of disability claims under welfare and retirement plans (the Final Rule). The purpose of the Final Rule is to add procedural protections and safeguards that are aimed at providing a full and fair claims review process for disability benefit … Continue Reading

Accelerating Deductions for Compensation and Benefits if Corporate Tax Rates Are Reduced

President-elect Trump proposes to reduce the maximum corporate income tax rate from 35 percent to 15 percent. While the effective date of any rate reduction is uncertain, it likely will not occur before 2018. Deductions claimed when tax rates are 35 percent are worth 20 percent more to the taxpayer than if the same deduction … Continue Reading

DOL Significantly Increases Some Penalties for ERISA Violations

The US Department of Labor increased the penalties for specified violations of the Employee Income Retirement Security Act of 1974.  Most of the penalty increases involve reporting and disclosure failures related to benefit plans and will be effective for penalties assessed after August 1, 2016, if the violation occurred after November 1, 2015. Read full … Continue Reading

Second Court of Appeals Win for State Street Bank in $200 Million Chrysler “Top Hat Plan” Class Action

“Top hat plans” have many attractive features, but a new court decision is a reminder that top hat plan participants have limited protections under ERISA – and that assets held in a rabbi trust are not protected from the claims of creditors upon the employer’s bankruptcy or insolvency. Our client, State Street Bank and Trust … Continue Reading

ERISA Basics National Institute: Section 401(k) Plans

A 401(k) plan has a qualified cash or deferred arrangement that is part of a profit sharing plan or stock bonus plan. Under the Internal Revenue Code Section 401(k)(2), an employee may elect to make contributions to the plan, the covered employee’s contributions are not distributable before severance from employment, disability, death, attainment of age … Continue Reading

Protecting Defined Contribution Plan Retirement Savings During Disability

As employers have moved away from traditional defined benefit plans toward defined contribution plans as the primary retirement savings vehicle for their employees, much has been written about the risks of shifting the retirement savings burden from the employer to the employee. One widely-recognized consequence of this shift in retirement savings methods is that many … Continue Reading
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