Tag Archives: Employee Retirement Income Security Act of 1974

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

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

Top Universities Hit with Retirement Plan Lawsuits: Lessons for Plan Sponsors

The recent wave of 403(b) lawsuits against more than a dozen prominent US universities could herald similar suits for other 403(b) plan sponsors. Plan sponsors can minimize their risk by reviewing their plan governance procedures, investment policy statements, and plan investment lineup and fee structure. Read the full article here to learn more.… Continue Reading

Reports on Increase in Retirement Plan Audits Further Illustrate the Need for Plan Sponsors to Focus on Administrative Compliance

Recent reports show that the number of retirement plan audits by government agencies is increasing. A survey released by Willis Towers Watson indicates that one in every three plan sponsors has experienced a retirement plan audit by a government agency in the past two years. Unofficial reports also indicate that the US Department of Labor … Continue Reading

Second Circuit Applies Stricter Rules for a Plan Administrator’s Noncompliance with Benefit Claims Regulations

The US Court of Appeals for the Second Circuit’s recent ruling addresses various issues that could arise during a plan administrator’s review of a participant’s benefit claim and appeal and any ensuing litigation, including the deference to be granted upon review in a federal court, civil penalties and the possibility of introducing additional evidence outside … Continue Reading

Two Adverse Decisions against Church Plans Reached at Appellate Court Level

Since 2014, large church-controlled health systems that offer defined benefit pension plans have seen lawsuits filed as to whether such plans are eligible to qualify for the ERISA church-plan exemption, which governs those arrangements. When a retirement plan meets the ERISA church-plan exemption, it is exempt from the typical funding and vesting requirements of ERISA … Continue Reading

EEOC Files Lawsuits Against Employers for Sex Discrimination Under Title VII

For the first time, the U.S. Equal Employment Opportunity Commission (EEOC) is suing private employers on behalf of employees alleging sexual orientation discrimination. On March 1, 2016, the EEOC issued a press release announcing it has filed its first two sexual orientation lawsuits alleging violations of Title VII of the Civil Rights Act of 1964 … Continue Reading

Supreme Court Emphasizes Heightened Pleading Standard for Stock Drop Cases

On January 25, 2016, the Supreme Court of the United States issued a per curiam opinion in Amgen Inc. v. Harris, holding that the Amgen, Inc. employees who filed suit after the value of the employer stock in which they had invested dramatically decreased, failed to sufficiently plead a breach of fiduciary duty claim under … Continue Reading

Supreme Court Issues Further Clarification on Equitable Relief Remedies Available Under ERISA

The Supreme Court of the United States’ recent ruling in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan holds that an ERISA plan cannot enforce an equitable lien against a participant’s general assets when the full amount of the settlement is spent on non-traceable items. This decision should encourage plan … Continue Reading

Seventh Circuit Finds that State Insurance Law Applies, Resulting in De Novo Review of Benefit Claim

On September 4, 2015, the U.S. Court of Appeals for the Seventh Circuit ruled in Fontaine v. Metropolitan Life Insurance Company that the Employee Retirement Income Security Act of 1974, as amended (ERISA), does not preempt an Illinois state insurance regulation that prohibits discretionary authority clauses in health and disability plan insurance policies. The Seventh … Continue Reading

View From McDermott: Judicial Dos and Don’ts of ERISA Benefit Claim

Much has been written about the challenges that exist for the Employee Retirement Income Security Act of 1974 (ERISA) plan fiduciaries related to their investment of plan assets or review of plan administration fees related to those investments, and those challenges will continue for the foreseeable future given recent decisions of the Supreme Court in … Continue Reading

Privacy and Security Concerns for Employee Benefit Plans with Service Provider Relationships

Recent cyber-attacks on health insurers have heightened awareness that sensitive participant and beneficiary information may not be adequately secure. There will undoubtedly be other attacks on databases maintained by service providers to employee benefit plans, which raises an important question for Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries: what should be done now … Continue Reading

Fiduciary Risks Involved in Transferring Assets from a Seller’s 401(k) Plan to the Buyer’s Plan

In many transactions, particularly those where the buyer is a portfolio company of a private equity fund, the buyer agrees to cause its 401(k) plan to accept a transfer of assets from the seller’s 401(k) plan. The asset transfer from the seller’s plan provides the buyer’s with an asset base with which to negotiate the … Continue Reading

View From McDermott: 2014 ERISA Litigation Review–Decisions From the Supreme Court and Beyond

Recently, the U.S. Supreme Court issued a number of significant ERISA cases.  In its 2013-14 term, the Supreme Court decided two ERISA-based appeals – Fifth Third Bancorp v. Dudenhoeffer and Heimeshoff v. Hartford Life & Acc. Ins. Co.  In the current 2014-15 term, the Supreme Court already issued one ERISA decision in M&G Polymers USA, … Continue Reading

Sixth Circuit Rejects Claim that Disgorgement of Profits Is Appropriate Remedy in ERISA Benefit Denial Action

On March 5, 2015, the U.S. Court of Appeals for the Sixth Circuit reversed the finding of a prior Sixth Circuit panel that allowed successful plaintiffs to recover additional equitable relief in the form of disgorgement of profits under a return-on-equity analysis in addition to the recovery of the denied benefits. This decision realigns the … Continue Reading

SEC No-Action Letter Permits Non-ERISA Retirement Plans to Issue Participant Fee Disclosures Without Violating Securities Laws

The U.S. Securities and Exchange Commission (SEC) issued a no-action letter on February 18, 2015, that extends relief from SEC Rule 482 to sponsors of certain retirement plans exempt from ERISA. The relief permits sponsors of non-ERISA plans to follow final U.S. Department of Labor regulations for participant-level fee disclosures, provided the sponsor complies with … Continue Reading

Senate Unanimously Approves Bill Modifying ERISA Section 4062(e)

On September 16, 2014, the United States Senate unanimously approved Senate Bill 2511, which would amend Section 4062(e) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), to clarify the definition of substantial cessation of operations.  ERISA Section 4062(e) enables the Pension Benefit Guaranty Corporation to require that employers financially guarantee pension … Continue Reading

Cracking the Code: Taxing Developments in Benefit Compliance

When a nonqualified deferred compensation plan qualifies as a “top-hat” plan under the regulations of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the benefits of that particular classification to an employer are that the plan is exempt from various reporting, disclosure and funding rules.  These exemptions can significantly ease an employer’s … Continue Reading

Developments Impacting Benefits for Same-Sex Spouses

As federal and state agencies and courts further examine the implications of the Supreme Court of the United States’ ruling on same-sex marriage in U.S. v. Windsor, the laws and regulations governing employee benefits for employees’ same-sex spouses continue to be clarified.  As a result, employers should monitor additional guidance as it is issued and continue … Continue Reading
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