Employee Retirement Income Security Act Archives - Page 3 of 9

High Court Pension Row May Have Broad Impact

by Richard J. Pearl | Oct 1, 2019 | Benefit Controversies, Fiduciary and Investment Issues, Retirement Plans

A US Supreme Court case pitting pensioners against US Bank could have a wide-ranging impact on who can bring suit under ERISA, whether they participate in a defined benefit pension plan or a 401(k) plan.

Recently, on Law360, McDermott’s Richard J. Pearl weighed in on the impact of Thole v. US Bank, one of three ERISA cases that the US Supreme Court will decide this term. The case, discussed in greater detail in our On the Subject, will address whether defined benefit pension plan participants have standing to bring suit under ERISA if their plan is fully funded.

Although the case focuses on participants’ ability to bring suit on behalf of defined benefit pension plans, according to Pearl, the case seems to ask the high court to answer a question that often crops up in defined contribution plan litigation, as well: Whose injury matters, the plan’s or the person’s? As a result, the court’s decision could impact not only litigation involving defined benefit pension plans, but also defined contribution plans, where case law is still being developed around what gives a participant grounds to sue on behalf of a plan.

Access the full article.

4 Ways to Manage Retirement Plan Data in New Era of Cybersecurity

by Mark E. Schreiber | Jul 9, 2019 | Employee Benefits, Privacy and Data Security, Retirement Plans

IBM estimated last year that data breaches cost companies $148 per stolen record. Given that, not surprisingly, many employers have grown increasingly concerned about the potential impact of such breaches, including breaches that may affect employer-sponsored benefit plans.

Courts have not yet formally addressed whether ERISA requires benefit plan fiduciaries to manage cybersecurity risks. However, a federal district court recently rejected a motion to dismiss filed by defendants seeking to avoid liability for fraudulent distributions from a plan caused by cyber criminals. There, the court held that the defendants were plan fiduciaries and that the plaintiffs had pled facts sufficient to allege that the defendants breached their fiduciary duties. Although this decision only relates to a motion to dismiss, the case underscores the potential for plaintiffs to assert, even in the absence of clear guidance, that plan fiduciaries are not doing enough to protect plan participants from cybersecurity risks.

As a result, with cybersecurity concerns on the rise, plan fiduciaries are continuing to enhance their focus on the best ways to protect employee data. Recently, on Law360, McDermott’s Mark E. Schreiber discussed four helpful tips for handling cybersecurity risks.

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ERISA Health Plan Fiduciaries Defeat DOL’s Excessive Fee Claims

by Erin Steele, Megan Mardy and Richard J. Pearl | Mar 26, 2019 | Benefit Controversies, Employee Benefits, Health and Welfare Plans

In one of the first ERISA cases to address claims against fiduciaries for excessive health plan fees, the court entered judgment in favor of the defendants on all counts. The decision addresses health plan fiduciary standards for reviewing plan fees and expenses.

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7 Tips to Avoid Compliance Missteps During Open Enrollment

by Jacob Mattinson and Megan Mardy | Nov 6, 2018 | Employee Benefits, Health and Welfare Plans, Privacy and Data Security

One of the busiest times of year for an employee benefits professional is open enrollment. It is a crucial and yet stressful time of year that typically results in numerous employee questions and complaints and is a time of year with high potential for both employer and employee mistakes. Despite the stress and potential for problems, open enrollment provides an opportunity for a company to set itself up for success for the following year.

The Employee Retirement Income Security Act (ERISA) does not require an annual opportunity for employees to change benefit plan elections. However, because of compliance issues that can spring from not offering a regular enrollment period, most companies choose to offer an “open enrollment” period, usually taking place in mid- to late fall for calendar-year health and welfare benefit plans.

Employee attention to employer communications during this period is often high, and attention to detail in participant communications behooves an employer during this period. Well-written and timely notices may be relied upon to satisfy many compliance obligations. Inaccurate or incomplete open enrollment materials, however, can create employee confusion and result in legal liability under the complex network of federal laws governing employer-sponsored benefit programs.

Read the full article here for a sampling of key issues to consider to help you avoid compliance missteps during this year’s open enrollment period.

Originally published in BenefitsPRO.com, October 2018.

What the Demise of the DOL’s Fiduciary Rule Means for Plan Sponsors

by Brian Tiemann | May 29, 2018 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

The Department of Labor’s fiduciary rule has recently been rendered unenforceable following a recent 5th Circuit Court of Appeals decision. In an article published by the Society for Human Resource Management, McDermott partner Brian Tiemann weighs in on what this means for plan sponsors. “As a result of the Fifth Circuit’s ruling, the suitability standard is effectively restored” for advising plan participants on investments, distributions and rollovers, Tiemann observed. He also points out that advisors may want to revise service agreements with plan fiduciaries to clarify the scope of advice that fiduciaries will provide participants.

Access the full article.

Originally published by the Society for Human Resource Management, May 2018.

White House Urges Suspension of DOL Fiduciary Rule

by Brian Tiemann | Feb 21, 2017 | Employee Benefits, Fiduciary and Investment Issues, Retirement Plans

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 that the DOL will now consider its legal options to delay the applicability date to comply with the President’s directive. McDermott’s ERISA practice will closely monitor these developments and provide additional guidance as it becomes available.

Read full article here.

White House Urges Suspension of DOL Fiduciary Rule

by Brian Tiemann | Feb 8, 2017 | Employee Benefits, Fiduciary and Investment Issues, Retirement Plans

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 that the DOL will now consider its legal options to delay the applicability date to comply with the President’s directive. McDermott’s ERISA practice will closely monitor these developments and provide additional guidance as it becomes available.

Read full article here.

Proposed Changes to Form 5500 Would Significantly Increase Reporting Obligations for Health and Welfare Plan Sponsors

by Joseph K. Urwitz and Megan Mardy | Aug 16, 2016 | Health and Welfare Plans

On July 11, 2016, the Department of Labor (DOL) and Internal Revenue Service (IRS) announced a proposal to implement significant changes to the forms and regulations that govern annual employee benefit plan reporting on Form 5500. The proposed changes, which were published in the Federal Register on July 21, 2016, would considerably increase the annual reporting obligations for nearly all health and welfare plans. The changes would also have a considerable impact on annual retirement plan reporting obligations. For more information about the effect of the proposed changes on retirement plan sponsors, see Proposed Changes to Form 5500 Reporting Requirements May Have Significant Impact on Retirement Plan Sponsors.

The DOL is seeking written comments on the proposed changes, which must be provided by October 4, 2016. The revised reporting requirements, if adopted, generally would apply for plan years beginning on and after January 1, 2019.

Read the full article here.

Proposed Changes to Form 5500 Reporting Requirements May Have Significant Impact on Retirement Plan Sponsors

by Joseph K. Urwitz, Megan Mardy and Sarah L. Engle | Aug 11, 2016 | Health and Welfare Plans, Retirement Plans

On July 11, 2016, the Department of Labor (DOL), Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) announced a proposal to implement sweeping changes to the forms and regulations that govern annual employee benefit plan reporting on Form 5500. The proposed changes, which were published in the Federal Register on July 21, 2016, would significantly increase the annual reporting obligations for nearly all retirement plans. The changes also would have a considerable impact on employer-sponsored group health plans. For more information about the effect of the proposed changes on health and welfare plan sponsors, see Proposed Changes to Form 5500 Would Significantly Increase Reporting Obligations for Health and Welfare Plan Sponsors.

The DOL is seeking written comments on the proposed changes, which must be provided by October 4, 2016. The revised reporting requirements, if adopted, generally would apply for plan years beginning on and after January 1, 2019. Certain compliance questions will, however, be effective for Form 5500 series returns filed for the 2016 plan year.

Read the full article here.

View From McDermott: Fifth Circuit Focuses on Process in ESOP Valuations

by Allison Wilkerson | Jul 28, 2016 | Employee Stock Ownership Plans (ESOPs), Labor, Retirement Plans

Though the Supreme Court’s 2014 unanimous ruling in Fifth Third Bank v. Dudenhoeffer announced the Employee Retirement Income Security Act (ERISA) standards for stock valuation in the context of a large public employee stock ownership plan (ESOP), the vast majority of ESOPs are still grappling with valuation issues. ESOPs that hold stock of closely-held corporations—approximately 90% of all ESOPs— remain almost unaffected by Dudenhoeffer’s valuation discussions, and face continued scrutiny by the Department of Labor (DOL). Appraisal of closely-held stock is an inexact science that involves an inherent level of uncertainty in assessing a variety of potential fact patterns.

This article summarizes valuation issues in acquisitions of closely-held corporation stock by ESOPs in the context of Perez v. Bruister, a recently decided Fifth Circuit case. The case stressed the importance of ‘‘process’’ in valuation determinations being utilized for acquisitions of a corporation’s stock by an ESOP. In reviewing the case, this article provides a detail of the process that should be followed to ensure consideration of the appropriate factors by fiduciaries in reviewing valuations for ESOP transactions. The article concludes with a discussion of guidance provided by the court in Bruister that may be instructive as to best practices for ESOP fiduciaries charged with establishing the value to be used by an ESOP holding shares of stock of a private company.

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