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Four Mistakes Clients Make with Roth IRAs and Their Estate

The Roth IRA is a powerful and popular tool for all investors. Investors make Roth contributions with after-tax money, and all distributions are tax-free so long as account holders are at least 59.5 years old and the account is at least five years old. In this Investopedia article, McDermott Partner Bobbi J. Bierhals offers insight about the Roth IRA’s biggest benefits for estate planning.

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Internal Trustee Fiduciary Liability

What are an employee stock ownership plan’s (ESOP) internal trustee’s fiduciary duties? What are some of the most common liability areas for trustees? And how can trustees prevent common liability pitfalls?

In this presentation, McDermott Partner J. Christian Nemeth offers insight into fiduciary duties, standards and best practices.

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Environmental, Social and Governance (ESG) Investing for Retirement Plans: Where We’ve Been, and Where We Are Now

Over the past year, the regulatory backdrop around environmental, social and governance (ESG) investing has shifted. As McDermott Partner Brian J. Tiemann explains in these slides, the US Department of Labor (DOL) under the Trump administration dropped ESG terminology and set a high standard for considering factors other than purely financial projections for investment alternatives. However, the Biden administration’s DOL has said that it will not enforce Trump-era regulations or pursue enforcement actions against plan fiduciaries for failure to comply with those regulations.

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New IRS Guidance for Tax-Qualified Pension Plans with Rehired Retirees Due to COVID-19

The Internal Revenue Service (IRS) recently updated its guidance for retiree distributions under a defined benefit plan. Specifically, the new IRS guidance addresses rehires following a bona fide retirement due to COVID-19.

As a background, a defined benefit plan may make distributions to a retiree only in the case of a “bona fide retirement,” which is a facts and circumstances analysis. In prior rulings, the IRS indicated that retiree distributions without a bona fide retirement can cause a defined benefit plan to lose its tax-qualified status, where both all contributions and earnings become immediately taxable.

According to the IRS, a rehire due to COVID-19-related “unforeseen circumstances” generally would not disqualify an individual’s prior retirement from being considered a bona fide retirement under a defined benefit plan. However, the IRS cautioned that such a rehire cannot include any prearrangement to rehire the individual prior to the individual’s retirement. Such a prearrangement still yields a retirement that is not “bona fide.”

Finally, although the IRS issued this guidance in question and answer format primarily for defined benefit plans, plan sponsors should be able to apply the same rationale to distributions from defined contribution plans. In short, the new IRS guidance provides welcome relief to plan sponsors and employers who are looking to rehire retirees in a tight job market.




Expect More Difficulty Obtaining Fiduciary Insurance

Increasing retirement plan-focused litigation has put insurance carriers and fiduciary service providers in difficult positions. In this article published in PLANSPONSOR, McDermott Partner Erin Turley said such litigation continues to be a “major focus” in the fiduciary insurance marketplace.

“It is a challenging market right now, to the point that we are looking at trying to think about ways that insurance products might be differently structured, to address what we hope will only be a short-term tightening in the market.”

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Ruling Gives Ammunition in Fights Over Health Insurer Clawbacks

A recent ruling from a New Jersey federal district court gives ammunition to providers fighting to stop insurers from engaging in cross-plan offsetting, a common billing practice where health insurers attempt to claw back overpaid claim money from one patient by withholding payment from another patient in a different health plan.

The ruling—which found that the practice violates the Employee Retirement Income Security Act (ERISA)—could lead to more lawsuits and changes to plan documents. McDermott partner Judith Wethall said in a recent Bloomberg Law article the ruling was more significant than the U.S. Court of Appeals for the Eighth Circuit’s 2019 ruling in Peterson v. UnitedHealth Group, Inc.

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Global Employment Law Update

Employment law continues to evolve, and it can be a challenge amid an ever-changing landscape of local employment laws for human resources executives and employment counsel at multinational businesses to maintain a consistent global corporate culture.

McDermott’s Global Employment Law Update brings you the key highlights from across Asia, Africa, Europe, Latin and North America. Developed in collaboration with peer firms operating in more than 50 countries, this resource guide contains summaries of the laws and significant court decisions that impacted employers and employees all over the world. It includes:

  • COVID-19 legislative updates
  • Remote work and telecommuting policies
  • Data privacy protections
  • Minimum wage and salary compensation updates
  • Changes to labor protection laws
  • Sexual harassment modifications

Access the report.




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