Deadlines and Developments Affecting Employee Benefit Plans
|
|
- Juliet Richards
- 8 years ago
- Views:
Transcription
1 Client Publication October 2004 Deadlines and Developments Affecting Employee Benefit Plans New regulations, some groundbreaking court cases and more developments under the Sarbanes-Oxley Act ( SOX ) will keep the sponsors of employee benefit plans busy for the next several months. This update highlights the key developments and suggests some key issues that corporate sponsors of benefit plans and plan fiduciaries should consider. I. WHAT S HAPPENING The following are the key developments covered in this update: In almost all cases, plan sponsors will be required under new regulations to roll over small distributions from retirement plans to individual retirement accounts. Procedures need to be in place soon for material benefit plans to comply with the internal control rules of SOX. Courts continue to hold open the door to liability for plan sponsors and fiduciaries for declines in employer stock held in retirement plans. There are new rules telling plan sponsors when and how to find missing persons who leave account balances behind in a terminated plan. II. SAFE HARBOR FOR AUTOMATIC ROLLOVERS Beginning on March 28, 2005, companies with taxqualified retirement plans that automatically distribute benefits greater than $1,000, but not in excess of $5,000 ( Small Amounts ), must roll over those amounts to an individual retirement account (an IRA ) established by the plan fiduciary for the terminated participant ( Automatic Rollovers ), unless the participant elects a rollover to another retirement plan or a cash distribution. This is a significant change, as currently retirement plans are permitted to pay automatic distributions directly to participants, absent other instructions. Under current law, tax-qualified retirement plans are permitted to make automatic distributions of benefits of $5,000 or less to terminated participants without their consent and to pay such amounts directly to participants, absent other instructions from participants. Although Automatic Rollovers of Small Amounts were mandated by the Economic Growth and Tax Relief Reconciliation Act of 2001 ( EGTRRA ), to prevent a drain of assets from the retirement system, their implementation has been delayed pending final regulations (the Final Regulations ) from the Department of Labor ( DOL ), which were issued on September 28, Therefore, retirement plan fiduciaries have less than six months to comply with the Final Regulations. During this period, they must decide if their plans will continue to make automatic distributions of Small Amounts and, if so, enter into an agreement with an IRA provider, select an investment vehicle for the IRA, amend the plans, and update the rollover notices and summary plan descriptions. Safe Harbor The Final Regulations provide a safe harbor for compliance with the Automatic Rollover requirements. Compliance with the safe harbor is not mandatory, as the DOL recognizes that fiduciaries who use other procedures may still satisfy the Automatic Rollover requirements. Fiduciaries that comply with the safe harbor will be deemed to have satisfied their fiduciary duties associated with the selection of an IRA provider and an investment product. To comply with the safe harbor, a fiduciary must: Enter into a written agreement with an IRA provider that: requires Automatic Rollovers to be invested in a product that preserves principal and provides a reasonable rate of return; limits fees and expenses to those charged by the IRA provider for comparable IRAs established for other purposes; and
2 2 gives the participant the right to enforce the agreement against the IRA provider. Update summary plan descriptions ( SPDs ) and rollover notices to include the plan s Automatic Rollover provisions and information on the IRA provider and the initial investment product, including information on fees and expenses associated with the IRA. Special Exemption to Help Financial Institutions In connection with the Final Regulations, the DOL issued a prohibited transaction class exemption (the PTE ) that allows a financial institution that sponsors a retirement plan for its employees to designate itself or an affiliate as the IRA provider for Automatic Rollovers. The PTE also allows financial institutions to use proprietary investment products as the initial investment choice under such IRA and be paid from income earned by the IRA. The PTE provides an exemption from most of the self-dealing restrictions (the so-called prohibited transaction rules ) imposed by the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). The PTE prohibits arrangements between fiduciaries of plans sponsored by financial services institutions to each serve as the IRA provider for the other s Automatic Rollovers. The conditions of the PTE mirror those of the Final Regulations, except that: Fees and expenses associated with the IRA, excluding set-up charges, may be charged only against the income earned by the IRA and cannot be in excess of reasonable compensation. In contrast, such fees may be charged against the principal in the IRA when the IRA is established with an unaffiliated IRA provider. Sales commissions in connection with an initial investment in a proprietary product may not be paid from the IRA. The affiliated IRA provider must maintain, for six years, records sufficient to substantiate compliance with the PTE. Considerations for Plan Sponsors and Fiduciaries Even though the timeline for implementing the Final Regulations is short, plan sponsors and fiduciaries should not rush to action. Plan sponsors should first weigh the advantages and disadvantages of amending the retirement plans to eliminate automatic distributions of Small Amounts or, alternatively, to eliminate all automatic distributions. By doing so, the requirement to comply with the Automatic Rollover provisions is also eliminated. Factors relevant to this decision include the cost and administrative burdens associated with retaining additional terminated participants in the retirement plans (for example, loss of amounts forfeited by missing participants, additional record keeping fees, employee communication costs, and additional PBGC premiums for defined benefit plans). If mandatory distributions are retained, the fiduciary must determine if it prefers the comfort of the safe harbor or another procedure that has not been blessed by the DOL. In either case, the fiduciary must select an IRA provider and a default investment. Fiduciaries affiliated with financial institutions must also decide whether to select a third party IRA provider or to rely on the PTE and select an affiliate. III. SARBANES-OXLEY INTERNAL CONTROL REQUIREMENTS All public companies must have procedures in place to assure that the internal control provisions of Section 404 of SOX apply to material benefit plans. SOX requires all companies both U.S. and non- U.S. that must file periodic reports with the SEC under the Securities Exchange Act of 1934, as amended, to start focusing more intently on internal financial controls and reporting procedures. Particularly, SOX requires an internal control report to be prepared by management detailing the adequacy of the registrant s internal financial control structure, describing any material weaknesses in the structure and identifying process controls and procedures for financial reporting. The registrant s independent auditors must attest to the adequacy of management s evaluation of internal controls. Internal control and financial reporting requirements mandated under Section 404 of SOX will become effective for the first fiscal year ending after November 15, 2004 for domestic issuers with a market capitalization of US$75 million or greater. They will be effective as of July 15, 2005 for all other registrants. For most registrants, it is anticipated that the internal control requirements may represent the single most significant compliance aspect of SOX. Stricter scrutiny of every registrant s material benefit plans is now unavoidable under the new internal control requirements. As a threshold matter, reporting companies must identify, generally in concert with internal and external auditors, those plans that have a material impact on their financial statements. This determination requires the consideration of both U.S. and non-u.s. plans and would likely cover defined benefit and other retirement plans, retiree welfare
3 3 benefit and stock-based compensation plans. This process can be complicated by the fact that plan design and administrative procedures typically vary among countries. Additionally, plan documents being reviewed may be in several different languages and linguistic nuances often get lost when translated into English. Registrants must then identify and review all material processes, documents and contracts applicable to the registrant s material benefit plans. These include the actual flow and reporting of financial information within and between several internal departments and committees such as actuarial, plan administration, payroll, trustee, and investment and benefits administration committees, as well as the flow of data to and from third-party administrators and service providers. Then, registrants must issue a report on the process review findings that includes: a narrative explaining the process and findings for each plan; a flowchart identifying each step and party responsible for maintaining the plan; a risk and control chart identifying processes, their potential risk factors, and the control mechanisms in place; and opportunities for improved controls. In the fourth step, the committees of the board of directors also provide narrative reports identifying their roles and responsibilities as directors in maintaining the plan. Finally, the auditor s report certifies the placement of internal controls. Ensuring compliance with the internal controls requirements of SOX can be quite complex and very time-consuming. To prepare, benefit managers should commence the process of gaining fuller understanding of a registrant s global compensation and benefits plans and enhancing oversight and management of all such programs worldwide as promptly as possible. IV. RECENT CASE LAW CONCERNING EMPLOYER STOCK IN RETIREMENT PLANS In the wake of recent corporate scandals and a declining market, a number of class-action lawsuits have been filed by retirement plan participants alleging fiduciary breaches due to failure to sell or take other actions with regard to employer stock held in a plan. 2 Not only are such suits being filed, but they are surviving motions to dismiss. Furthermore, in addition to plan sponsors and fiduciaries, the defendants include members of the sponsor s board of directors, members of plan committees and thirdparty trustees. Two separate actions commenced against Sprint Corporation and BellSouth Corporation are illustrative of these types of suits. 3 Although both cases involve 401(k) plans with an employee stock ownership plan component ( ESOP ), the courts opinions on recent dismissal motions exemplify the types of issues that fiduciaries of all individual account plans with employer stock funds must address. 4 The Sprint Case The Sprint plaintiffs commenced their action after Sprint stock fell to near junk-bond status and asserted claims against: Sprint Corporation, as administrator of the plans; the committees that administered the plans and their individual members; individual members of Sprint s board of directors; and the third-party trustee for the plans. Plaintiffs asserted that the defendants breached their fiduciary duties because: Sprint stock was an imprudent investment. The plans were not amended to reduce or eliminate the requirement to offer an employer stock fund. The defendants (excluding the trustee) made misrepresentations and failed to disclose material information in SEC filings incorporated into the plans SPDs and in a Sprint newsletter. Sprint and its board of directors failed to monitor the plan committees and appointed members who lacked the independence necessary to make appropriate decisions. Most of these claims survived defendants dismissal motion. When considering the motion to dismiss, the court noted, among other things, that, when communicating to participants, fiduciaries are obligated to speak truthfully. Additionally, the court viewed certain misleading statements by board members in a Sprint newsletter used for plan-related communications to be addressing the propriety of investments in Sprint stock. The court also cited the duty of an appointing fiduciary to monitor its appointees and the fact that the appointment of senior executives created a heightened risk of a conflict of interest. Certain of the claims, however, were dismissed. The amendment claim was dismissed because amending the terms of a plan is not a fiduciary function. The imprudent investment and disclosure claims against
4 4 the members of the board of directors also were dismissed because their fiduciary obligations were limited to the appointment of committee members. The BellSouth Case The BellSouth plaintiffs commenced their action shortly after BellSouth publicly revealed that accounting errors had led to an overstatement of BellSouth s revenues by $163 million (or about $0.09 per share). The plaintiffs alleged that such accounting errors and BellSouth s unusually high-risk investment in the Latin American communications markets led stock values to trade at artificially high levels and asserted claims against: BellSouth Corporation, as sponsor and a named fiduciary of the plan; the committees that administered the plan; individual members of BellSouth s board of directors; and certain named BellSouth officers, including officers who were signatories to SEC-filed documents. In addition to asserting claims that are similar to those made by the plaintiffs in the Sprint case, the plaintiffs also asserted that the defendant officers and directors breached their duty of loyalty because they would be unlikely to reveal information to plan participants which would discourage investment in BellSouth stock due to the link between the defendants salary and company performance. All of these claims survived the defendants motion to dismiss, even though the court recognized that BellSouth s stock did not lose value due to the accounting errors and expressed doubts regarding the claim that the Latin American investment caused BellSouth stock to be an imprudent investment. The court acknowledged, as a result of recent corporate scandals, that courts are more willing to find an affirmative duty to disclose beyond the disclosure duties specified in ERISA or the common law. Such duty, however, has only been imposed in special circumstances with a potentially extreme impact on a plan as a whole, where plan participants generally could be materially and negatively affected. 5 What Does This Mean for Plan Sponsors and Fiduciaries? These class-action suits reinforce the potential liability facing fiduciaries of all plans with employer stock funds and the need to take steps to reduce this liability, such as: Amending plans to specifically name the employer stock fund as an investment option, so that the decision to include this investment option can be characterized as a so-called settlor decision that is not subject to fiduciary standards. Retaining an independent advisor to develop an investment policy and guidelines for the assessment of investment performance. Monitoring regularly the performance of all plan investment options and taking appropriate actions based on such performance, such as eliminating underperforming investment options. Ensuring that plan communications come from employees responsible for plan administration, and are not combined with non-benefit communications (including those discussing company performance and prospects). Reviewing information prepared for non-plan related reasons (such as SEC filings) before incorporating it into SPDs. Avoiding potential conflicts of interest that can arise when a sponsor s executive officers are appointed as fiduciaries. Ensuring that fiduciaries with appointment responsibilities monitor the activities of their fiduciary appointees. V. DUTIES OF FIDUCIARIES OF TERMINATED PLANS TO LOCATE PARTICIPANTS AND DISTRIBUTE ASSETS On September 30, 2004, the DOL issued Field Assistance Bulletin No (the Bulletin ), which addresses the obligations of a fiduciary of a terminated defined contribution plan to find missing participants. While the scope of the Bulletin is limited, 6 it sets forth steps that a fiduciary must undertake in order to satisfy its obligations. Search Methods Since certain search methods involve nominal expense while offering significant potential for producing results, the DOL considers them a mandatory part of any search, regardless of the size of the account. Accordingly, a fiduciary cannot cause a plan to dispose of a missing participant s account unless each of the search methods listed below proves ineffective: using certified mail; checking other records of the plan; checking with a beneficiary designated by the missing participant; or
5 5 using the letter forwarding service of either the IRS or the Social Security Administration. If these search methods fail, others may be used. While reasonable expenses related to locating a missing participant may be charged to that participant s account, the amount must be reasonable and the method of allocation consistent with the plan and the fiduciary s duties. Therefore, to determine the appropriate action, a fiduciary should consider the size of the participant s account, relative to the cost of attempting to locate the participant. Distribution Options If efforts to locate participants in a terminated defined contribution plan fail, the fiduciary must distribute their assets in accordance with the Bulletin. Individual Retirement Accounts The Bulletin provides that establishing an IRA is the preferred distribution option for missing participants accounts. A fiduciary will satisfy its duties under ERISA if it complies with the relevant requirements of the Automatic Rollover safe harbor for distributions from a terminated defined contribution plan to missing participants or those who fail to elect a method of distribution. A distribution pursuant to the Bulletin in excess of $5,000 will not fail to comply with the Final Regulations, assuming all other relevant requirements are met. However, the PTE will not exempt distributions in excess of $5,000 made to an affiliated IRA-provider or invested in a financial product of an affiliate from ERISA s prohibited transaction rules. Alternative Distribution Options If an IRA provider is not willing to accept these rollovers, a fiduciary may consider distributions to federally insured bank accounts or transfers to state unclaimed property funds in the state of each participant s last known residence or work location. The permitted distribution alternatives do not include 100% withholding because such practice would not necessarily result in the withheld amounts being matched to the missing participant s income tax liabilities. Considerations for Plan Fiduciaries While termination of a defined contribution plan is not an everyday occurrence, a fiduciary could be held responsible for amounts not distributed in accordance with the Bulletin. Therefore, a fiduciary should: Follow the procedures in the Bulletin and maintain records of all actions taken, including the rationale for such action, in connection with missing participants accounts. Exercise caution when using an affiliated IRA provider or a financial product of an affiliate, since the PTE will not cover rollovers in excess of $5,000. Review applicable state laws before transferring an account to an unclaimed property fund. ENDNOTES 1. Fiduciary Responsibility Under the Employee Retirement Income Security Act of 1974 Automatic Rollover Safe Harbor; Final Rule, 69 Fed. Reg (2004) (to be codified at 29 C.F.R. pt. 2500). 2. See, e.g., Howell v. Motorola Inc., N.D. Ill., No. 03 C 5044 (Sept. 23, 2004); In re WorldCom Inc. ERISA Litigation, S.D.N.Y., No. 02 Civ (DLC), brief filed Jan. 16, In re Sprint Corp. ERISA Litigation, D. Kan., No JWL, May 27, 2004; Hill v. BellSouth Corp., et al., N.D. Ga., No. 1:02-CV JOF (Mar. 30, 2004). 4. Although the plaintiffs and defendants disagreed in the Sprint case on whether the plans were ESOPs, the court assumed they were ESOPs for purposes of the dismissal motion. 5. See BellSouth Corp. at 13 (quoting In re Enron Corp., 284 F. Supp. 2d 511, 559). 6. The Bulletin does not apply to defined benefit plans, as Title IV of ERISA includes the PBGC s rules regarding missing participants applicable to defined benefit plans subject to Title IV. Additionally, the Bulletin assumes that the terminated plan does not provide an annuity option and there are no other defined contribution plans in the controlled group to which account balances from the terminated plan could be transferred.
6 6 This memorandum is intended only as a general discussion of these issues. It should not be regarded as legal advice. We would be pleased to provide additional details or advice about specific situations if desired. For more information on the topics covered in this issue, please contact: Henry C. Blackiston, III (+1 212) hblackiston@shearman.com Kenneth J. Laverriere (+1 212) klaverriere@shearman.com John J. Cannon, III (+1 212) jcannon@shearman.com Doreen E. Lilienfeld London (+44 (0) 20) dlilienfeld@shearman.com Jeffrey P. Crandall (+1 212) jcrandall@shearman.com Linda E. Rappaport (+1 212) lrappaport@shearman.com SHEARMAN & STERLING LLP 599 Lexington Avenue,, NY Under the regulations of some jurisdictions, this material may constitute advertising. As used herein, Shearman & Sterling refers to Shearman & Sterling LLP, a limited liability partnership organized under the laws of the State of Delaware.
DOL Issues Automatic Rollover Rules for Small Cash-Outs
Important Information Distributions and Withdrawals October 2004 DOL Issues Automatic Rollover Rules for Small Cash-Outs WHO'S AFFECTED These rules affect qualified defined benefit plans and defined contribution
More informationSummary of DOL Regulatory Package Redefining Fiduciary Advice and Proposing or Amending Prohibited Transaction Class Exemptions
Summary of DOL Regulatory Package Redefining Fiduciary Advice and Proposing or Amending Prohibited Transaction Class Exemptions On April 20, the Department of Labor ( DOL ) proposed a package of regulations
More informationLegal Alert: Pension Protection Act of 2006 Changes Affecting Defined Contribution Plans
Legal Alert: Pension Protection Act of 2006 Changes Affecting Defined Contribution Plans August 16, 2006 A little more than half of the 907 pages of the Pension Protection Act of 2006 deal with pension
More informationClient Update DOL Catches Many in Expanded Fiduciary Net; Is Proposed Exemption an Escape Hatch or a Trap Door?
1 Client Update DOL Catches Many in Expanded Fiduciary Net; Is Proposed Exemption an Escape Hatch or a Trap Door? NEW YORK Lawrence K. Cagney lkcagney@debevoise.com Jonathan F. Lewis jflewis@debevoise.com
More informationUnderwater Stock Options and Stock Option Exchange Programs
Executive Compensation & Employee Benefits April 2, 2009 Underwater Stock Options and Stock Option Exchange Programs Equity-based incentive awards are intended to motivate high levels of performance and
More informationIRS Provides Automatic Rollover Guidance
Important Information Distributions and Withdrawals February 2005 IRS Provides Automatic Rollover Guidance WHO'S AFFECTED This guidance affects sponsors of and participants in qualified defined benefit
More informationALERT. DOL Issues Conflict of Interest Rule on Investment Advice: Fiduciary Net Will Widen on April 10, 2017. The Final Rule
ALERT Executive Compensation & Employee Benefits April 13, 2016 DOL Issues Conflict of Interest Rule on Investment Advice: Fiduciary Net Will Widen on April 10, 2017 A comprehensive new rule issued by
More informationThe Benefits of Mandatory Distributions
The Benefits of Mandatory Distributions A WHITE PAPER BY FRED REISH AND BRUCE ASHTON C. Frederick Reish (310) 203-4047 Fred.Reish@dbr.com www.drinkerbiddle.com/freish Bruce L. Ashton (310) 203-4048 Bruce.Ashton@dbr.com
More informationDOL Proposes Rule Redefining Fiduciary Status in the Investment Advice Context
DOL Proposes Rule Redefining Fiduciary Status in the Investment Advice Context By Tess J. Ferrera and Christine A. Schleppegrell June 3, 2015 Background The Department of Labor (DOL) released its long-awaited
More informationDEFINED CONTRIBUTION PROVISIONS OF THE PENSION PROTECTION ACT OF 2006. by Timothy J. Snyder, Esquire
DEFINED CONTRIBUTION PROVISIONS OF THE PENSION PROTECTION ACT OF 2006 by Timothy J. Snyder, Esquire The Pension Protection Act of 2006 ( PPA ) is a colossal 907 page statute, 779 of which relate to retirement
More informationERISA Fiduciary Responsibilities A Primer for Plan Sponsors
ERISA Fiduciary Responsibilities A Primer for Plan Sponsors Abigail B. Pancoast Senior Counsel, Lincoln Financial Group The information contained in this article is intended to provide general information,
More informationFIDUCIARY BEST PRACTICES:
FIDUCIARY BEST PRACTICES: Taking a prudent approach to plan management A White Paper Prepared by Transamerica Retirement Solutions Contents Taking a prudent approach to plan management 2 Appointment of
More informationEmployee Relations. Employee Benefits. Stopping Pension Leaks: New Rules Requiring Default IRA Rollovers Go Into Effect In 2005. Anne E.
VOL. 30, NO. 4 SPRING 2005 Employee Relations L A W J O U R N A L Employee Benefits Stopping Pension Leaks: New Rules Requiring Default IRA Rollovers Go Into Effect In 2005 Anne E. Moran One of the primary
More informationRollover Benefits From an Employer Plan
Part III Administrative, Procedural and Miscellaneous Safe Harbor Explanation Eligible Rollover Distributions Notice 2009-68 I. PURPOSE This notice contains two safe harbor explanations that may be provided
More informationDe-risking Alternatives for Plan Sponsors Compliance Requirements. April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores
De-risking Alternatives for Plan Sponsors Compliance Requirements April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores Today s elunch Presenters Michael Falk Partner, Employee Benefits
More informationDepartment of Labor Fiduciary Advice Definition and Conflict of Interest Rule
CLIENT MEMORANDUM Department of Labor Fiduciary Advice Definition and Conflict of Interest Rule May 11, 2015 On April 14, 2015, the U.S. Department of Labor ( DOL ) released its long-awaited re-proposed
More informationPost-Employment Medical Benefits for Executives After Health Care Reform
EXECUTIVE COMPENSATION & EMPLOYEE BENEFITS CLIENT PUBLICATION December 2010... Post-Employment Medical Benefits for Executives After Health Care Reform... How the discrimination rules under 105(h)(2) of
More informationThe Department of Labor ( DOL ) recently issued proposed regulations
Proposed Labor Regulations Would Require Greater Disclosures of Fees, Compensation, and Conflicts of Interest for Employee Benefit Plan Services Providers PETER M. VARNEY AND PATRICK C. DICARLO The authors
More informationPROXY VOTING POLICY PROCEDURE. Responsibility and Oversight
PROXY VOTING BACKGROUND An investment adviser is required to adopt and implement policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of
More informationConocoPhillips Store Retirement Plan. Title VII of the ConocoPhillips Retirement Plan
ConocoPhillips Store Retirement Plan Title VII of the ConocoPhillips Retirement Plan Effective Jan. 1, 2015 ConocoPhillips Store Retirement Plan (Title VII of the ConocoPhillips Retirement Plan) ConocoPhillips
More informationTABLE OF CONTENTS PAGE GENERAL INFORMATION B-3 CERTAIN FEDERAL INCOME TAX CONSEQUENCES B-3 PUBLISHED RATINGS B-7 ADMINISTRATION B-7
STATEMENT OF ADDITIONAL INFORMATION INDIVIDUAL VARIABLE ANNUITY ISSUED BY JEFFERSON NATIONAL LIFE INSURANCE COMPANY AND JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT G ADMINISTRATIVE OFFICE: P.O. BOX 36840,
More informationCase 3:06-cv-00701-MJR-DGW Document 526 Filed 07/20/15 Page 1 of 8 Page ID #13631 IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ILLINOIS
Case 3:06-cv-00701-MJR-DGW Document 526 Filed 07/20/15 Page 1 of 8 Page ID #13631 IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ILLINOIS ANTHONY ABBOTT, et al., ) ) No: 06-701-MJR-DGW Plaintiffs,
More informationFor a complete list of EBSA publications, call toll-free: 1-866-444-EBSA (3272) This material will be made available in alternate format upon request:
This publication has been developed by the U.S. Department of Labor, Employee Benefits Security Administration. It is available on the Internet at: www.dol.gov/ebsa For a complete list of EBSA publications,
More informationExecutive Summary Definition of the Term Fiduciary U.S. Department of Labor Conflict of Interest Rule 1. April 15, 2016
Executive Summary Definition of the Term Fiduciary U.S. Department of Labor Conflict of Interest Rule 1 April 15, 2016 I. Introduction. Background. The U.S. Department of Labor (the Department or DOL )
More informationSweeping New DOL Proposal on Fiduciary Investment Advice
Sweeping New DOL Proposal on Fiduciary Investment Advice Edward E. Bintz, Edward A. Frueh, and Douglas S. Pelley April 2015 The long-anticipated proposed fiduciary regulation was released by the Department
More informationEmployee Relations L A W J O U R N A L
VOL. 31, NO. 2 AUTUMN 2005 Employee Relations L A W J O U R N A L Employee Benefits So You ve Become a Fiduciary: Signposts, Suggestions, and Sympathy Anne E. Moran and Misty Leon Being appointed a fiduciary
More informationMEMORANDUM. ERISA s Structure
1920 N Street NW Suite 400 Washington, DC 20036-1659 T 202.833.6400 www.segalco.com MEMORANDUM To: From: Hank Kim, Executive Director and Counsel, NCPERS Sarah Mysiewicz Gill, Senior Legal Representative,
More informationPaying Employee Benefit Plan Expenses
Jennifer E. Eller and Andrée M. St. Martin, Groom Law Group, Chartered This Note describes the types of expenses that may and may not be paid from the assets of an employee benefit plan. It also explains
More informationTitle IV Treatment of Rollovers from Defined Contribution Plans to Defined Benefit Plans
[Billing Code 7709-02-P] PENSION BENEFIT GUARANTY CORPORATION 29 CFR Parts 4001, 4022, and 4044 RIN 1212-AB23 Title IV Treatment of Rollovers from Defined Contribution Plans to Defined Benefit Plans AGENCY:
More informationRETIREMENT INSIGHTS. Understanding your fiduciary role. A plan sponsor fiduciary guide
RETIREMENT INSIGHTS Understanding your fiduciary role A plan sponsor fiduciary guide ABOUT Perhaps no one topic in the employee benefits arena has drawn more attention and scrutiny over the last several
More informationDOL s Fiduciary Rule Increases Advisor Responsibility
New Frontiers For Advisors Who Lead the Way First Quarter 2016 DOL s Fiduciary Rule Increases Advisor Responsibility Industry interest has increased around the Department of Labor s (DOL) rule expanding
More informationCOMMENTARY. Once More Unto the Breach The New Fiduciary Definition. Background
APRIL 2015 COMMENTARY Once More Unto the Breach The New Fiduciary Definition On April 14, 2015, the Department of Labor (the Department ) re-proposed regulations (the Proposed Regulations ) that define
More informationUNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA
UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA Roger Krueger, et al., Plaintiffs, v. Ameriprise Financial, Inc., et al., Defendants. Case No. 11-cv-2781 Judge Susan Richard Nelson NOTICE OF CLASS ACTION
More informationCOMPENSATION & EMPLOYEE BENEFITS LAW BULLETIN A BIRDSEYE VIEW OF THE PENSION PROTECTION ACT OF 2006
COMPENSATION & EMPLOYEE BENEFITS LAW BULLETIN A BIRDSEYE VIEW OF THE PENSION PROTECTION ACT OF 2006 The Pension Protection Act of 2006 (the Act ) is arguably the most comprehensive pension reform legislation
More informationESOP Summary Plan Description
BUSINESS IN THE RIGHT DIRECTION. GO WEST. ESOP Summary Plan Description for participants in the Employee Stock Ownership Plan This Summary Plan Description (SPD) corresponds with the plan document dated
More informationNOTICE OF CLASS ACTION SETTLEMENT AND FAIRNESS HEARING
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ILLINOIS Anthony Abbott, et al., Plaintiffs, v. Lockheed Martin Corp., et al., Defendants. Case No. 06-cv-701 Chief Judge Michael J. Reagan NOTICE OF CLASS
More informationComparison of the DOL s Proposed and Final Conflict of Interest or Fiduciary Rule and Best Interest Contract Exemption
Proposed Rule April 2015 Final Rule April 2016 I. Rule Governing Investment Advice Definition of Investment Advice Includes any of the following types of advice for a fee or other compensation: Includes
More informationDefined Contribution Legal and Regulatory Update
Defined Contribution Legal and Regulatory Update for Government Clients JULY 2015 We are committed to providing you with the information and tools you need to help meet your fiduciary responsibilities
More information9/29/2014. Recent Legal and Regulatory Developments. Agenda
Recent Legal and Regulatory Developments Ben F. Wells, Esq. Dinsmore & Shohl, LLP (202) 372-9119 ben.wells@dinsmore.com Robert F. Schatz, Esq. Schatz Brown Glassman Kossow LLP (860) 231-1054 rschatz@esopplus.com
More informationUnderstanding fiduciary responsibilities
INSIGHTS SERIES Perspectives and viewpoints on investing in today s market Understanding fiduciary responsibilities A guide for retirement plan sponsors Offering a retirement savings opportunity in the
More informationVIA EMAIL e-ori@dol.gov. March 31, 2004
VIA EMAIL e-ori@dol.gov March 31, 2004 Office of Regulations and Interpretations Employee Benefits Security Administration Room N-5669 U.S. Department of Labor 200 Constitution Avenue NW Washington, DC
More informationTrends and Best Practices for Addressing Automatic Participant Rollovers
Trends and Best Practices for Addressing Automatic Participant Rollovers Saving Plan Sponsors Time and Money While Reconnecting Participants with Their Retirement Savings Introduction November 2015 The
More informationCHAPMAN UNIVERSITY DEFINED CONTRIBUTION RETIREMENT PLAN
CHAPMAN UNIVERSITY DEFINED CONTRIBUTION RETIREMENT PLAN Summary Plan Description This document is a summary of the provisions of Chapman University Defined Contribution Retirement Plan (the Plan ) as in
More informationPrepared by The Wagner Law Group
401(k) FIDUCIARY TOOLKIT Sponsored by ishares Prepared by The Wagner Law Group Rollover Assets Navigating ERISA Restrictions on Cross-Selling to 401(k) Plan Participants IMPORTANT INFORMATION The Wagner
More informationHCS RETIREMENT SERVICES
Distribution Form HCS RETIREMENT SERVICES 1095 South 800 East Orem, UT 84097 Phone 801-224-1900 Fax 801-224-1930 www.hcsretirement.com EMPLOYER: PERSONAL INFORMATION Last Name: S.S. #: First Name: Date
More informationUnderstanding Your Fiduciary Role
Understanding Your Fiduciary Role Legal Aspects of Fiduciary Duties Under ERISA for Tax-Exempt Plan Sponsors Mark A. Daniele, Esq. McCarter & English, LLP January 26, 2012 I. ERISA ERISA imposes various
More informationNOTICE OF CLASS ACTION SETTLEMENT AND FAIRNESS HEARING
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ILLINOIS Anthony Abbott, et al., Plaintiffs, v. Lockheed Martin Corp., et al., Defendants. Case No. 06-cv-701 Chief Judge Michael J. Reagan NOTICE OF CLASS
More informationPROFIT SHARING PLANS. for Small Businesses
PROFIT SHARING PLANS for Small Businesses 1 Profit Sharing Plans for Small Businesses is a joint project of the U.S. Department of Labor s Employee Benefits Security Administration (EBSA) and the Internal
More informationHow To Pay Out Of Plan To A Pensioner
Pension Derisking: Distributing Annuity Contracts After Lee v. Verizon ALI CLE Pension, Profit-Sharing, Welfare, and Other Compensation Plans San Francisco, CA April 3, 2014 Rosina B. Barker Ivins, Phillips
More information11 U.S.C. 704(a)(11) ERISA 3(16)(A) CHAPTER 7 PANEL TRUSTEE TRAINING. Timothy J. Snyder, Esquire
CHAPTER 7 PANEL TRUSTEE TRAINING Trustee Issues with Pension and Other Benefit Plans Timothy J. Snyder, Esquire 11 U.S.C. 704(a)(11) 11 U.S.C. 704(a)(11) provides that the Chapter 7 Trustee assumes the
More informationExecutive Summary Definition of the Term Fiduciary U.S. Department of Labor Conflict of Interest Rule 1. Updated April 15, 2015
I. Introduction. Executive Summary Definition of the Term Fiduciary U.S. Department of Labor Conflict of Interest Rule 1 Updated April 15, 2015 Background. The U.S. Department of Labor (the Department
More informationemployee benefits update october/november 2011
employee benefits update october/november 2011 Setting sail to a safe harbor Is a safe harbor 401(k) plan right for you? Looking for money What you need to know about plan loans THE CONTROLLING DOCUMENT
More informationFiduciary best practices:
Smart Paper Fiduciary best practices: Taking a prudent approach to plan management Contents Appointment of a fiduciary committee... 2 Additional considerations... 2 Written committee charter... 2 Periodic
More informationOutgoing Annuity Tax-Qualified Transfer Exchange, Conversion or Direct Rollover from RiverSource Life Insurance Co. of New York i
DOC0107138065 Service address: RiverSource Life Insurance Co. of New York 70500 Ameriprise Financial Center Minneapolis, MN 55474 Outgoing Annuity Tax-Qualified Transfer Exchange, Conversion or Direct
More information401 (k) plan administration
401 (k) plan administration how plan sponsors can reduce legal risk May 9, 2005 Evan Miller emiller@hhlaw.com Brian L. Shiker blshiker@hhlaw.com Hogan & Hartson LLP 555 Thirteenth Street, NW Washington,
More informationCONSIDERATIONS IN ESTABLISHING A LEVERAGED ESOP
AUTHOR John A. Wilhelm, Partner Venable, LLP 8010 Towers Crescent Drive Suite 300 Vienna, VA 22182 PH: 703.760.1917 FAX: 703.821.8949 JAWilhelm@Venable.com CONSIDERATIONS IN ESTABLISHING A LEVERAGED ESOP
More informationUNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933 Release No. 8750 / November 8, 2006 UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 54720 / November 8, 2006 INVESTMENT
More informationRETIREMENT PLANS: COMPLIANCE WITH THE NEW 403(b) REGULATIONS
TOPIC: RETIREMENT PLANS: COMPLIANCE WITH THE NEW 403(b) REGULATIONS INTRODUCTION: Unlike other types of qualified retirement plans, 403(b) plans have been only loosely regulated since they first came into
More informationCHECKLIST. Returned letter and envelope. Located Participant? Yes* No *If yes, no further attempts to locate required.
Procedure & Checklist for Missing Participants in Terminated DC Plan This Procedure & Checklist is meant to assist a plan fiduciary in meeting its fiduciary obligations under the Employee Retirement Income
More informationERISA Litigation & Company Stock: Supreme Court s Decision in Fifth Third v. Dudenhoeffer August 11, 2014
ERISA Litigation & Company Stock: Supreme Court s Decision in Fifth Third v. Dudenhoeffer August 11, 2014 Presentation for American Benefits Council by: Ms. Theresa S. Gee, Counsel O Melveny & Myers LLP
More informationUNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE. No. 2:08-md-01919-MJP. Lead Case No. C07-1874 MJP
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE IN RE WASHINGTON MUTUAL, INC. SECURITIES, DERIVATIVE AND ERISA LITIGATION This Document Relates to: ERISA Action No. 2:08-md-01919-MJP
More informationBORGWARNER INC. RETIREMENT PLAN - CASH BALANCE COMPONENT SUMMARY PLAN DESCRIPTION
BORGWARNER INC. RETIREMENT PLAN - CASH BALANCE COMPONENT SUMMARY PLAN DESCRIPTION 2008 TABLE OF CONTENTS Page INTRODUCTION... 1 ELIGIBILITY TO PARTICIPATE... 2 Who is eligible to participate in the Plan?...
More informationIRS and Department Of Labor Issue Automatic Enrollment and Investment Guidance
IRS and Department Of Labor Issue Automatic Enrollment and Investment Guidance By Cynthia Marcotte Stamer Recent guidance from the U.S. Department of Labor ( Labor Department ) and Internal Revenue Service
More informationERISA Causes of Action *
1 ERISA Causes of Action * ERISA authorizes a variety of causes of action to remedy violations of the statute, to enforce the terms of a benefit plan, or to provide other relief to a plan, its participants
More informationPlan Sponsor Basics Webinar Series Issues for 401(k) Plan Sponsors with Employer Stock Investment Funds
Plan Sponsor Basics Webinar Series Issues for 401(k) Plan Sponsors with Employer Stock Investment Funds Webinar 5 of 5 November 4, 2014 www.morganlewis.com Presenters: Lisa H. Barton Jeremy P. Blumenfeld
More informationA NEW FIDUCIARY RULE FOR THE INVESTMENT ADVICE PLAYBOOK
PlanAdvisorTools.com A NEW FIDUCIARY RULE FOR THE INVESTMENT ADVICE PLAYBOOK How the DOL s Fiduciary Rule Has Fundamentally Changed Investment Advice for IRAs By Fred Reish - Partner, Drinker Biddle &
More informationFiduciary Liability. Liability Case Studies & Strategies for 401(k) Plan Fiduciaries. 401(k) FIDUCIARY TOOLKIT. Prepared by The Wagner Law Group
401(k) FIDUCIARY TOOLKIT Sponsored by ishares Prepared by The Wagner Law Group Fiduciary Liability Liability Case Studies & Strategies for 401(k) Plan Fiduciaries IMPORTANT INFORMATION The Wagner Law Group
More informationBest Interest Contract/PTE 84-24 Comparison
Best Interest Contract/PTE 84-24 Comparison General Conditions Relief Provided Full BIC (IRAs) BIC for ERISA Plans BIC for Level Fee Fiduciaries PTE 84-24 Requires the following: 1. The transaction be
More information(a) Definitions. As used in this Section, the following terms have the meanings set forth below.
EMPLOYEE BENEFIT REPS AND WARRANTIES FOR STOCK PURCHASE WHERE REPRESENT THE BUYER Section 1.1 Employee Benefits. (a) Definitions. As used in this Section, the following terms have the meanings set forth
More informationYOUR ROLLOVER OPTIONS
YOUR ROLLOVER OPTIONS You are receiving this notice because all or a portion of a payment you are receiving from the RICHMOND RETIREMENT SYSTEM (the Plan ) is eligible to be rolled over to an IRA or an
More informationKey Points about DOL s Proposed Fiduciary Definition
REPRINTED FROM DC DIMENSIONS WINTER 2016 Key Points about DOL s Proposed Fiduciary Definition By Ian Kopelman, Chair, Employee Benefits and Executive Compensation Practice Group, and Joseph Hugg, Of Counsel,
More informationCHECK LIST FOR REFUND REQUESTS FROM PUBLIC SAFETY
CHECK LIST FOR REFUND REQUESTS FROM PUBLIC SAFETY (1) Please Complete and Submit a Form P6 Application For A Separation Refund Or Deferred Retirement: Complete the top portion of the P6 form Initial under
More informationVANOVERBEKE, MICHAUD & TIMMONY, P.C.
VANOVERBEKE MICHAUD & TIMMONY, P.C. MICHAEL J. VANOVERBEKE ATTORNEYS AND COUNSELORS 79 ALFRED STREET THOMAS C. MICHAUD DETROIT, M ICHIGAN 48201 JACK TIMMONY TEL: 313-578-1200 FRANCIS E. JUDD FAX: 313-578-1201
More informationNew law provides additional designated Roth contribution options
Important information Plan design October 2010 New law provides additional designated Roth contribution options Who s affected This information applies to sponsors of and participants in 401(k) plans,
More informationTosco Corporation Pension Plan For Union Employees Formerly Employed by Monsanto Company. Title VIII of the ConocoPhillips Retirement Plan
Tosco Corporation Pension Plan For Union Employees Formerly Employed by Monsanto Company Title VIII of the ConocoPhillips Retirement Plan Effective Jan. 1, 2015 Tosco Corporation Pension Plan For Union
More information2013 Expert Series What Trustees in Bankruptcy Need to Know About Pension Plans Marcia Wagner, Esq., Managing Director, Wagner Law Group
2013 Expert Series What Trustees in Bankruptcy Need to Know About Pension Plans Marcia Wagner, Esq., Managing Director, Wagner Law Group On September 18, 2013, PenChecks Trust hosted What Trustees in Bankruptcy
More informationSEC Proposes Large Trader Reporting System
Financial Institution Advisory and Financial Regulatory Group May 2010 SEC Proposes Large Trader Reporting System I. Overview II. Introduction: Identifying Large Traders On April 14, 2010, the Securities
More informationIU 457(b) Retirement Plan
IU 457(b) Retirement Plan July 2013 January 2015 Contents IU 457(b) Retirement Plan Highlights... iv Section A: General Information...1 Section B: Participation and Service...2 Section C: Contributions...3
More information401k Regulation and the New Fiduciary Responsibility of Sponsors
T. Rowe Price 401(k) Fees and Fiduciary Responsibility What Plan Sponsors Need to Know Retirement Insights Executive Summary In recent years, market events have made many 401(k) participants more sensitive
More informationExercising Fiduciary Authority and Control Over the Investment Menu in 403(b) Plans Subject to ERISA
Reproduced with permission from Tax Management Compensation Planning Journal, 38 CPJ 299, 11/05/2010. Copyright 2010 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com Exercising
More informationDodd-Frank Act Changes Affecting Private Fund Managers and Other Investment Advisers By Adam Gale and Garrett Lynam
Dodd-Frank Act Changes Affecting Private Fund Managers and Other Investment Advisers By Adam Gale and Garrett Lynam I. Introduction The Dodd-Frank Wall Street Reform and Consumer Protection Act ( Dodd-Frank
More informationI. Introduction. II. Methods of Pension De-Risking
TESTIMONY OF ROBERT S. NEWMAN Covington & Burling LLP ERISA Advisory Council United States Department of Labor Hearing on PRIVATE SECTOR PENSION DE-RISKING AND PARTICIPANT PROTECTIONS June 5, 2013 I. Introduction
More informationSUMMARY PLAN DESCRIPTION
SUMMARY PLAN DESCRIPTION HCMC LEGAL, INC. EMPLOYEE STOCK OWNERSHIP PLAN EFFECTIVE AS OF AUGUST 19, 2011 TABLE OF CONTENTS Introduction... 1 Type of Plan... 1 Plan Sponsor... 1 Purpose of This Summary...
More informationHOUSE BILL No. 2087. By Committee on Insurance 1-26. AN ACT enacting the Kansas professional employer organization licensing
Session of 00 HOUSE BILL No. 0 By Committee on Insurance - 0 0 AN ACT enacting the Kansas professional employer organization licensing act. Be it enacted by the Legislature of the State of Kansas: Section.
More informationYOUR. ESOP Summary Plan Description
YOUR ESOP Summary Plan Description TO OUR EMPLOYEES KeHE Distributors, Inc. ( Company ) maintains the KeHE Distributors, Inc. Employee Stock Ownership Plan ( Plan ) so that you and other employees may
More informationSponsored by ishares. Prepared by The Wagner Law Group. Fiduciary Status. Understanding the Different Roles and Status of 401(k) Fiduciaries
401(k) Fiduciary Toolkit Sponsored by ishares Prepared by The Wagner Law Group Fiduciary Status Understanding the Different Roles and Status of 401(k) Fiduciaries IMPORTANT INFORMATION The Wagner Law Group
More informationCredit Rating Agencies
Capital Markets Credit Rating Agencies The Dodd-Frank Act includes reforms that address credit rating agencies and the credit ratings they provide. The Act seeks to impose corporate governance guidelines,
More informationMajor Retirement Savings Provisions of EGTRRA
Major Retirement Savings Provisions of EGTRRA Issue Current Law Prior Law Reinstated in 2011 if EGTRRA Sunsets IRA LIMITS IRA Contributions Limit Catch-Up Contributions The IRA maximum annual contribution
More informationAmerican Bankers Association. Sample Glossary of Collective Investment Fund Terms for Disclosures to Retirement Plan Participants
American Bankers Association Sample Glossary of Collective Investment Fund Terms for Disclosures to Retirement Plan Participants January 5, 2012 2 PART 1 Frequently Asked Questions (FAQs) About Collective
More informationYour ERISA Attorney Isn t Going Anywhere Soon
Your ERISA Attorney Isn t Going Anywhere Soon PANELISTS: Jeremy P. Blumenfeld, Partner, Morgan Lewis & Bockius John E. Schadl, Principal and Head of ERISA and Fiduciary Services, Vanguard Marcia Wagner,
More informationMeeting Your Fiduciary Responsibilities
Meeting Your Fiduciary Responsibilities To view this and other EBSA publications, visit the agency s Web site at: www.dol.gov/ebsa. To order publications, contact us electronically at: www.askebsa.dol.gov.
More informationAny questions about your benefits under the 401(k) Plan should be directed to your Human Resources representative.
Summary Plan Description Background The COUNTRY/IAA 401(k) Plan, (the Plan or the 401(k) Plan) is a defined contribution plan that provides retirement benefits. The Employee Retirement Income Security
More informationDISTRIBUTION REQUEST FORM
DISTRIBUTION REQUEST FORM Previously, there was little oversight regarding the withdrawal of money from 403(b) plans. The recent law changes now apply sanctions on Plans that do not carefully monitor and
More informationSpecial Tax Notice Regarding Plan Payments (IRS Safe Harbor Notice)
Your Rollover Options Special Tax Notice Regarding Plan Payments (IRS Safe Harbor Notice) You are receiving this notice because all or a portion of a payment you are receiving from Seattle Employees Retirement
More informationPDS Staff Profit Sharing Plan Summary Plan Description April, 2015
PDS Staff Profit Sharing Plan Summary Plan Description April, 2015 TABLE OF CONTENTS INTRODUCTION TO THE PLAN... 1 GENERAL INFORMATION ABOUT THE PLAN... 2 ELIGIBILITY AND PARTICIPATION... 3 CONTRIBUTIONS
More informationExecutive Compensation and Benefits Alert
April 2015 Executive Compensation This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should
More informationNotice to Employees of Archer Daniels Midland Company of Application for Authorization under Prohibited Transaction Exemption 96-62, as Amended
Notice to Employees of Archer Daniels Midland Company of Application for Authorization under Prohibited Transaction Exemption 96-62, as Amended You are hereby notified that Archer Daniels Midland Company
More informationEmployee Relations. Terminating 403(b) Arrangements: IRS Guidance Answers Some Questions, Avoids Others. Anne E. Moran
VOL. 36, NO. 2 AUTUMN 2011 Employee Relations L A W J O U R N A L Employee Benefits Terminating 403(b) Arrangements: IRS Guidance Answers Some Questions, Avoids Others Anne E. Moran T he legal requirements
More informationThe IRA Rollover. Making Sense Out of Your Retirement Plan Distribution
The IRA Rollover Making Sense Out of Your Retirement Plan Distribution Expecting a Distribution? You have been a participant in your employer s retirement plan for a number of years, and you have earned
More informationSPECIAL TAX NOTICE REGARDING PLAN PAYMENTS (QDRO Alternate Payee) i A. TYPES OF PLAN DISTRIBUTIONS
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS (QDRO Alternate Payee) i This notice explains how you can continue to defer federal income tax options for your QDRO distribution from the Plan under a qualified
More information