Over the past several years, the IRS and DOL have significantly increased the number of benefit plans audits conducted each year.
As a result, it is important for plan sponsors to understand the types of issues that often arise in connection with such audits. At the recent PSCA 2019 National Conference, Brian Tiemann explained what plan sponsors should expect if their benefit plan is selected for audited. More specifically, Brian discussed the ways audits are typically triggered and how to respond when a plan is audited. In addition, Brian outlined some of the most common retirement and health and welfare compliance issues identified in plan audits. He also discussed how plan sponsors can prepare for audits and even address potential compliance issues before they occur.
Diane M. Morgenthaler and Jeffrey M. Holdvogt recently presented the webinar “Student Loan Benefits and Other 401(k) Developments” at the Worldwide Employee Benefits Network Chicagoland program. In the presentation, they discussed a variety of new 401(k) trends and developments, including:
Employer options for student loan benefits and related considerations;
The IRS’s recent expansion of its determination letter program to certain hybrid and merged plans; and
New changes to EPCRS, the IRS’s comprehensive program for correcting tax-qualified plan failures.
For more information on these and other developments, please see our On the Subjects on the SECURE Act and the changes to EPCRS.
Join us Friday, May 17, as Allison Wilkerson, Brian Tiemann and Sarah Engle join host Judith Wethall to talk through the value of conducting a proactive self-audit of 401(k) plans. They will provide best practices designed to reduce the risk of costly government investigations. Attendees will come away prepared and confident in their position, and ready to respond assertively if an investigation comes to pass.
Our lively 45-minute discussion will cover the following points:
Self-auditing common compliance issues raised during IRS audits, including errors in administering the plan’s eligibility rules, compensation definition, loan procedures and minimum required distribution provisions
Self-auditing common issues raised during DOL audits, including late payroll deposits
Tips to enhance plan governance procedures
Friday, May 17, 2019
10:00 – 10:45 am PST 11:00 – 11:45 am MST 12:00 – 12:45 pm CST 1:00 – 1:45 pm EST
Recently, the US District Court for the District of Columbia dismissed a proposed class action lawsuit brought by former Georgetown employees under the Employee Retirement Income Security Act of 1974 (ERISA) over fees and investments in its two retirement plans. Plaintiffs alleged that Georgetown breached its fiduciary duty of prudence under ERISA by selecting and retaining investment options with excessive administrative fees and expenses charged to the plans, and unnecessarily retained three recordkeepers rather than one.
The court dismissed most of the claims on the grounds that plaintiffs had not plead sufficient facts showing that they had individually suffered an injury. Because they challenged defined contribution plans (as opposed to defined benefit plans), the plaintiffs had to plead facts showing how their individual plan accounts were harmed. In this case, the named plaintiffs had not invested in the challenged funds, or the challenged fund had actually outperformed other funds, or, in the case of the early withdrawal penalty from the annuity fund, the penalty had been properly disclosed and neither plaintiff had attempted to withdrawal funds – thereby suffering no injury. Moreover, in dismissing the allegations that the Plans included annuities that limited participants’ access to their contributed funds, the court rejoined, “[i]f a cat were a dog, it could bark. If a retirement plan were not based on long-term investments in annuities, its assets would be more immediately accessed by plan participants.” As to another fund, the court rejected the claim that the fiduciaries should be liable for the mere alleged underperformance of the fund, noting that “ERISA does not provide a cause of action for ‘underperforming funds.” Nor is a fiduciary required to select the best performing fund. A fiduciary must only discharge their duties with care, skill, prudence and diligence under the circumstances, when they make their decisions.
What to expect in 2019 and how to prepare now. Join McDermott lawyers Judith Wethall, Ted Becker and Rick Pearl for an interactive discussion regarding ERISA litigation trends.
Join our lively 45-minute discussion while we tackle the following items:
Plaintiffs’ law firm’s solicitations
Health & Welfare Fee Litigation
Defined-Benefit Plan Litigation – Actuarial Equivalence lawsuits and greater concern about discretionary decisions
Stock-Drop Cases – The Jander decision: Relaxing the Dudenhoeffer standard and the potential impact of a stock market decline
401k/403b – Fee/investment update
ESOP transactions – New DOL and plaintiffs’ counsel’s theories
Friday, January 11, 2019 10:00 – 10:45 am PST 11:00 – 11:45 am MST 12:00 – 12:45 pm CST 1:00 – 1:45 pm EST
The IRS recently issued proposed amendments to regulations concerning 401(k) plan hardship distributions. The proposed regulations address changes to hardship distribution rules from the Bipartisan Budget Act of 2018 and other legislation.
Though the regulations are only proposed, 401(k) plan sponsors should promptly consider these changes because decisions should be made on applying certain optional changes, which generally can be effective for plan years beginning after December 31, 2018.
The Internal Revenue Service (IRS) and the Department of Labor (DOL) conduct different types of benefit plan audits, such as retirement plans and health and welfare plans, and for various reasons. In a presentation, Jeffrey Holdvogt and Maggie McTigue discuss IRS and DOL audit triggers, the process for each and what to do if your plan is audited. They also discuss the top audit issues and actionable steps companies can take to avoid audits and compliance issues.
In a recent webinar, Jake Mattinson and Sarah Raaii discussed the practices that benefits professionals can adopt to add value to their organizations and avoid common mistakes. Jake and Sarah discussed recommended practices for ERISA benefit claims and inquiries, how to review plan compensation definitions and payroll codes, best practices for corrections using the Voluntary Fiduciary Correction Program (VFCP), and the importance of document retention. The webinar is part of the larger Benefits Emerging Leaders Working Group, a group that meets to discuss key benefit issues and trends and provides networking opportunities aimed at connecting tomorrow’s benefit leaders with a broad network of professionals.
Please join McDermott partners, Diane Morgenthaler and Jamie Weyeneth, on October 16-18 at the 2013 ERISA Basics National Institute in Chicago, IL. Designed for in-house and union counsel, benefits specialists, private practitioners, litigators, consultants and accountants, this conference provides an opportunity to hear from the ERISA experts. For more information, click here.
In October 2010, the U.S. Department of Labor (DOL) issued final regulations requiring plan administrators to disclose certain plan and investment-related information, including fee and expense information, to participants and beneficiaries in 401(k) plans and other participant-directed individual account plans. In February 2012, the DOL issued final regulations under section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA) requiring certain covered service providers to furnish specified information to plan administrators so that they may comply with their disclosure obligations in the participant-level disclosure regulations. On May 7, 2012, the DOL published additional guidance addressing frequently asked questions concerning the participant disclosure regulations and the service provider disclosure regulations.
The new guidance consists of 38 questions and answers addressing, among other topics, revenue sharing disclosures, brokerage window disclosures, designated investment alternatives, transition rules, and form and content of investment-related information. Plan administrators should review the new guidance now to determine if any changes to participant disclosures are required prior to the initial/annual disclosure deadline of August 30, 2012.
A detailed analysis of the new guidance from McDermott is forthcoming in the near future. For now, click here to link to the new guidance. To listen to McDermott’s webinar on participant fee disclosure and service provider disclosures, click here.
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