Earlier this year, the US Pension Benefit Guaranty Corporation (PBGC) issued a final rule, modifying PBGC regulations that apply to defined benefit pension plans. Among those changes were revisions to: (i) the reportable event notification requirements; (ii) annual financial and actuarial information (Form 4010) reporting; (iii) single-employer plan termination rules; and (iv) the premium rate calculation rules. The rule was generally effective on March 5, 2020, but some provisions have different applicability dates.
A significant issue facing many business owners is the impact of underfunded multiemployer pension plans. This is most common, but not exclusive to, unionized businesses. McDermott Partner and Global Head of the Firm’s Employee Benefits and Executive Compensation Practice Group Todd Solomon joins Domenic Rinaldi, owner and managing partner of Sun Acquisitions, for a recent episode of the M&A Unplugged Podcast to talk about multiemployer pension plans and discuss proactive steps owners can take to get ahead of future issues regarding pension participants.
The most obvious potential conflict of interest for advisers setting up or serving pooled employer plans is if their practice is affiliated with the investments being selected—but there are other potential pitfalls to acknowledge.
In a recent article, Erin Turley, a partner with McDermott Will & Emery, said a potential conflict of interest for advisers to PEPs would be if they were acting as either a 3(21) or 3(38) fiduciary to help select investments and were paid from plan assets.
The Employee Retirement Income Security Act of 1974 (ERISA) requires plan fiduciaries to act prudently and loyally when making decisions about the plan. In Martin v. CareerBuilder, LLC, a federal district court held that the complaint’s allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants violated their ERISA obligations.
The US Supreme Court took up several Employee Retirement Income Security Act (ERISA) cases this term, handing down both a major loss and a substantial win to employees looking to sue their employers over retirement plan mismanagement. In a recent Law360 article, McDermott Partner Chris Nemeth discusses these decisions.
“It’s going to be really interesting to see how this plays out,” said Nemeth.
Plan Sponsor Council of America hosted a webinar to discuss the new electronic disclosure rule for retirement plans from the US Department of Labor (DOL), which took effect July 26, 2020. The rule allows employers to deliver disclosures to plan participants primarily electronically, which the DOL says will reduce printing, mailing, and related plan costs by an estimated $3.2 billion over the next decade. Speakers included McDermott’s Andrew Liazos, and the topics discussed included:
New Safe Harbors, Effective Date and Scope of Rules Notice and Access Safe Harbor E-Disclosure Rule Q & A
On June 12, 2020, the Office for Civil Rights (OCR) of the US Department of Health and Human Services (HHS) finalized a rule under Section 1557 of the Patient Protection and Affordable Care Act (the 2020 Final Rule) that rescinds certain protections afforded to LGBTQ individuals and persons with limited English proficiency. At the same time, the 2020 Final Rule removes burdensome disclosure requirements that may be a welcome relief for entities covered by Section 1557. On June 15, 2020, the Supreme Court of the United States ruled that workplace discrimination based on gender identity and sexual orientation is forbidden under Title VII of the Civil Rights Act of 1964. Although Title VII is not included in the precedential civil rights laws that gave rise to Section 1557, we nevertheless anticipate that the Supreme Court’s holding will lead to legal challenges in a number of areas, including healthcare and health insurance, religious exemptions and the 2020 Final Rule from HHS OCR.
In response to the administrative difficulties faced by plan administrators due to the ongoing COVID-19 pandemic, the Internal Revenue Service (IRS) recently issued Notice 2020-35, which extends additional retirement plan deadlines for 2020 not previously extended under IRS Notice 2020-23. The IRS also stated that this relief applies for purposes of ERISA if the tax code deadline has a corresponding ERISA provision.
The US Departments of Labor, Health and Human Services, and Treasury issued a second set of answers to frequently asked questions. The tri-agency FAQs (Part 43) clarify important health and welfare provisions under the Families First Coronavirus Response Act (FFCRA), which became law on March 18, 2020, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020. Both laws addressed Coronavirus (COVID-19) testing and prevention coverage, as well as expansion of telehealth service availability.
On Monday, June 15, 2020, the US Supreme Court held in Bostock v. Clayton County that Title VII of the Civil Rights Act of 1964 protects transgender, gay and lesbian employees (and prospective employees) from workplace discrimination based on sex. This means that the protective authority of Title VII for LGBTQ individuals generally extends to employer-sponsored healthcare benefits.
Subscribe
