Fiduciary and Investment Issues Archives - Page 13 of 23

The Directed Trustee in the Post-Dudenhoeffer World

by Joseph K. Urwitz | Jan 22, 2015 | Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

Court cases challenging the actions of Employee Retirement Income Security Act fiduciaries have continued unabated since the scandal of Enron in 2002. Since then, a large number of cases are in the “stock drop” area, which encompasses cases relating to employer securities investments when the stock price drops severely. The litigation has focused on whether a presumption of prudence exists that protects fiduciaries holding employer securities investments on behalf of a retirement plan. In June 2014, the U.S. Supreme Court ruled in the case of Fifth Third Bancorp v. Dudenhoeffer that ERISA doesn’t provide a presumption of prudence to protect fiduciaries of plans investing in employer securities. Now that the Dudenhoeffer decision resolves the presumption issue, it is reasonable to expect that ERISA cases may return to focus on the fiduciary duties of a directed license.

Read the full article.

Please Join McDermott Partner Todd Solomon at the Illinois Fiduciary Summit

by McDermott Will & Emery | Dec 4, 2014 | Fiduciary and Investment Issues

On Thursday, December 11, 2014, Chicago partner, Todd Solomon will speak at the Illinois Fiduciary Summit at Hyatt Lodge at McDonald’s Campus. Joined by additional keynote speakers from Wells Fargo and Crowe Horwath, Todd will discuss various topics important to retirement plan committee decision makers, including:

Top 10 Fiduciary Pitfalls 401(k) & 403(b) Plan Sponsors Need To Avoid
Fiduciary Obligations & Reducing Your Liability
How to Measure Plan Success
Evaluating Service Providers & Maximizing Vendor Negotiations
Outlook on the Bond Market and Recent On Goings at PIMCO

This event free of charge to McDermott clients and is certified for three hours of CPA/CPE credit and HRCI/SPHR/PHR general credit.

To register for the event, click here.

June 30 Deadline Approaches for Mandatory E-File FBAR Reporting

by Diane Morgenthaler, Ruth Wimer and Todd Solomon | Jun 25, 2014 | Fiduciary and Investment Issues

2014 presents particular challenges with respect to FBAR, the Report of Foreign Bank and Financial Accounts, for certain U.S. persons with interests in or signature authority over assets exceeding $10,000 held outside the U.S. in foreign accounts. The deadline for calendar year 2013 reporting obligations is June 30, 2014, and by then all taxpayers must e-file completed forms using the Bank Secrecy Act (BSA) E-Filing System. Failure to file the FBAR can result in criminal sanctions. In addition, failure to file the FBAR can result in civil penalties exceeding 100 percent of the foreign account balance, as recently determined by the Federal District Court in the May 28, 2014, decision inU.S. v. Carl R. Zwerner.

The BSA requires any U.S. person with a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account, exceeding certain thresholds to report the “maximum value of the account” yearly to the Internal Revenue Service (IRS). This requirement may now only be satisfied by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, FBAR, which replaces Form 90.22-1. An overview of the FBAR filing requirements is provided by the IRS. But in summary, an FBAR must be filed by any U.S. person who either owns or has signature authority over a foreign account that, at any point during the year, was valued at or greater than $10,000. For FBAR purposes, a foreign account includes any account that is held outside the United States, including those at foreign branches of U.S. banks. For more details regarding the specifics of which accounts must be reported, two prior On the Subject newsletters about FBAR reporting can be found here and here.

FinCEN is attempting to make the new e-filing user friendly. The mandatory e-filing requirement information, capability to register and to upload completed FBARs, and new Form 114 for those individuals and businesses that must file an FBAR is accessible through the BSA e-file website.

The BSA e-file website allows a taxpayer to either file the Form 114 directly as an “Individual” by uploading a completed file or, alternatively, to fill out Form 114a permitting another party, designated by the BSA system as an “Institution,” to file the Form 114 on his or her behalf. For example, the new Form 114a may be used by an employer company to file the FBAR as an Institution on behalf of any of its executives who are required to file an FBAR because of non-exempt signatory authority over the employer’s foreign bank accounts. (Note that FBAR filing by certain individuals with signatory authority but no ownership interest in a foreign account may be deferred until June 30, 2015, pursuant to FinCEN Notice 2013-1.) For its own FBAR, the employer company may register as an Institution and designate a “Supervisory User,” who has authority to file on behalf of the company and who, [...]

Continue Reading

DOL Issues Guidance on Plan Asset Status of Revenue Sharing Payments

by McDermott Will & Emery | Sep 3, 2013 | Fiduciary and Investment Issues, Retirement Plans

The U.S. Department of Labor (DOL) recently issued guidance on whether accounts holding revenue sharing payments constitute “plan assets” under ERISA. Prior to the issuance of the DOL guidance, it was unclear whether these amounts would be deemed to be ERISA plan assets. If such amounts were treated as ERISA plan assets, they would be subject to various requirements under ERISA. The DOL also addressed the responsibilities of plan fiduciaries in evaluating revenue sharing agreements. Plan fiduciaries should review their current revenue sharing arrangements in light of the new DOL guidance.

To read the full article, click here.

DOL Revises Guidance on Participant Fee Disclosures for Brokerage Window Investments

by McDermott Will & Emery | Aug 8, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Diane M. Morgenthaler, Elizabeth A. Savard and Maggie McTigue

The U.S. Department of Labor (DOL) recently issued new and welcome guidance for fiduciaries of account-based retirement plans by withdrawing its controversial guidance on fee disclosures for brokerage windows, self-directed brokerage accounts and similar arrangements (SDBAs). For now, the DOL has reverted to its prior regulatoqury guidance that fee disclosures with respect to particular investment options that participants select through an SDBA are not required, unless the SDBA option is specifically identified as available under the retirement plan. This new guidance removes the burden of monitoring the number of participants invested in a particular option through the SDBA and of making fee disclosures with respect to certain SDBA options.

Background

As described in our June 12, 2012, newsletter, the DOL issued Field Assistance Bulletin (FAB) 2012-02 on May 7, 2012, to provide additional guidance on the participant fee disclosure requirements for defined contribution plans with participant-directed investments. Historically plan fiduciaries have taken the position that they are not responsible for monitoring the particular investment options participants select though an SDBA. However, in Q&A-30 of FAB 2012-02, the DOL indicated that plan fiduciaries may need to make participant fee disclosures with respect to an investment option that is only available through the SDBA if a significant number of participants elected to invest in that option. This position surprised many plan administrators because it was inconsistent with prevailing interpretations of prior DOL guidance. In addition, the DOL was criticized for issuing their position in an FAB rather than through a rulemaking process that would have given interested parties notice and an opportunity to comment.

New Guidance

In response to requests from benefits industry groups and other interested parties, the DOL issued FAB 2012-02R, which withdraws the prior Q&A-30 and replaces it with a new Q&A-39. Under Q&A-39, an investment option is a designated investment alternative for purposes of the participant fee disclosure rules only if it has been specifically identified as available under the plan. Thus, fee disclosures generally will not be required for investment options that participants select through an SDBA.

Q&A-39 is welcome guidance for fiduciaries of plans with SDBAs, as it removes the burden of monitoring the number of participants invested in a particular option through the SDBA and of making fee disclosures with respect to certain SDBA options. Fiduciaries are still bound by the general ERISA fiduciary duties of prudence and loyalty to participants who use SDBAs, including taking into account the nature and quality of services provided in connection with the SDBA. The DOL also noted that while plans are not required to have a particular number of designated investment alternatives, the failure to designate any investment alternatives (for example, to avoid fee disclosure obligations) would raise questions under the general fiduciary duties of prudence and loyalty.

New Guidance From the Department of Labor Clarifies Participant Disclosure Requirements

by McDermott Will & Emery | May 8, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Maureen O’Brien and Karen Simonsen.

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.

New Foreign Financial Asset Reporting Requirement with Deadline of April 17, 2012

by McDermott Will & Emery | Mar 29, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Ira B. Mirsky, Karen A. Simonsen, Todd A. Solomon and Adrienne Walker Porter

The Foreign Account Tax Compliance Act (FATCA) requires certain U.S. taxpayers holding foreign financial assets, including an interest under a foreign pension or deferred compensation plan and foreign equity awards, to report those interests beginning with this tax filing season. Taxpayers who fail to meet their obligation to file Form 8938 are subject to significant penalties.

To read the full article, click here.

McDermott Webcast Discussing Service Provider and Participant Disclosure Rules and Electronic Delivery Guidance

by McDermott Will & Emery | Mar 13, 2012 | Fiduciary and Investment Issues

The U.S. Department of Labor (DOL) recently issued final regulations relating to service provider fee disclosures to plan fiduciaries under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended (ERISA) which affect the participant fee disclosure regulations under Section 404(a) of ERISA finalized by the DOL in October 2010. Under the new final regulations, service providers must provide initial fee disclosures to plan fiduciaries by July 1, 2012, and plans must provide initial fee disclosures to participants by August 30, 2012. In addition, the DOL recently issued guidance regarding electronic delivery of disclosures to participants under Technical Release 2011-03R.

McDermott Will & Emery recently offered a complimentary webcast that focused on what employers should expect to receive from service providers and the practical steps they should take to fulfill their fiduciary responsibilities to provide participant fee disclosures in light of the new final regulations and the guidance regarding electronic delivery.

If you missed the webcast, please click here to listen to the discussion and/or view the slides.

McDermott Speakers for the Webcast:
Karen Simonsen, Partner, Chair, Plan Fiduciary and Investment Management Group
Maureen O’Brien, Partner
Elizabeth Savard, Partner

DOL Issues Electronic Guidelines for New 2012 Participant Investment and Fee Disclosures

by McDermott Will & Emery | Feb 15, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Diane Morgenthaler, Susan Schaefer and Lisa Loesel

The U.S. Department of Labor recently issued guidelines for the electronic distribution of mandatory investment and fee disclosures for participants in self-directed account plans subject to ERISA. This guidance may help plan administrators implement the new rules for the disclosure of quarterly and annual plan-related information, but still contains affirmative participant approval requirements for the electronic distribution of all initial disclosure notices and mandated investment-related information to participants. Prior to August 2012, plan sponsors and administrators of calendar-year plans should familiarize themselves with the new guidelines to determine what mandatory disclosures will be made in electronic format (if any), and whether their plans have sufficient systems and administrative capabilities to provide the mandatory disclosures in an electronic format.

To read the full article, please click here.

DOL to Re-Propose “Fiduciary” Definition Regulation in Wake of Considerable Criticism

by McDermott Will & Emery | Nov 21, 2011 | Fiduciary and Investment Issues, Retirement Plans

by Jonathan J. Boyles, Karen A. Simonsen and Ashley McCarthy

The U.S. Department of Labor recently withdrew a proposed regulation that would have substantially expanded the definition of “fiduciary” under federal employee benefits law. The regulation will be re-proposed in early 2012, although it is unclear whether any proposal will be finalized prior to the 2012 presidential election.

To read the full article, click here.

BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES

RECENT POSTS