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ERISA Cases to Watch in 2020: All Eyes on the High Court

2020 is shaping up to be a banner year for benefits law, with three ERISA cases already on the US Supreme Court’s docket and a number of other high-profile lawsuits at the circuit court level that could attract the justices’ attention.

While waiting on the high court’s ERISA decisions, lawyers are watching litigation trends develop in the lower courts and waiting to see if the high court picks up another two ERISA cases.

McDermott’s Richard J. Pearl contributes to a Law360 article that look at what 2020 may hold for benefits litigation.

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Originally published on Law360, January 2020




Addressing Employees’ Student Loan Debt in 2020

Student loan debt skyrocketed in the past decade, topping $1.5 trillion among millions of Americans. The crisis has prompted US employers to address it in their benefits programs.

McDermott’s Jeffrey M. Holdvogt contributes to a Plan Sponsor article that provides a review of how employers can help employees break free from the bind student loan debt has on financial wellbeing and retirement savings.

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Originally published on Plan Sponsor, December 2019




401(k) Lawsuits on the Rise: Best Practices for Plan Fiduciaries

At the 36th Annual ISCEBS Symposium, Todd Solomon presented best practices for plan fiduciaries to avoid 401(k) plan and 403(b) plan class action lawsuits. Todd discussed fiduciary responsibilities under ERISA as well as potential consequences of breaching fiduciary responsibilities. He highlighted notable cases brought against plan fiduciaries, including those that allege excess plan fees. Todd discussed the need for rigorous monitoring and documentation of the review process.

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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 of the Tax-Exempt Entity can reduce the likelihood of costly and burdensome litigation. Similarly, payment of severance may reduce the risk of negative publicity for the Tax-Exempt Entity by diminishing resentment felt by departing employees. Severance may also help retain existing employees by providing them with a measure of economic security that can dissuade them from seeking alternative employment, particularly if they suspect that the Tax-Exempt Entity has encountered budgetary shortfalls and may be implementing near-term workforce reductions. For these and other reasons, many Tax-Exempt Entities have either implemented or are considering implementing severance programs. Tax-Exempt Entities should be aware of unique opportunities and recent IRS regulations that impact the design of severance programs. This article discusses key decisions and planning opportunities for Tax-Exempt Entities to consider when designing and implementing severance plans and individual severance arrangements. Tax-Exempt Entities face a number of legal and regulatory challenges in establishing severance arrangements, particularly with respect to executive-level severance, as discussed in more detail in Part I. Part II discusses the legal parameters around using Code Section 403(b) retirement savings plans to offer severance to employees with lower levels of compensation.

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IRS Issues Revenue Ruling Clarifying Termination Provisions for 403(b) Plans

by Philip Castrogiovanni and Todd A. Solomon

In Revenue Ruling 2011-7, the IRS addresses the requirements for a plan sponsor to terminate a 403(b) plan, and the tax consequences to participants of doing so.  Particularly, the IRS addresses termination of 403(b) plans consisting of employee deferrals and employer contributions whose assets are invested in individual annuity contracts, custodial accounts and regulated investment companies, as well as termination of a 403(b) money purchase pension plan.  The guidance is helpful in administering the final 403(b) regulations, as the specific requirements to terminate a 403(b) plan were not addressed in detail in those regulations.

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